area handbook series 

Venezuela 

a country study 




Venezuela 

a country study 



Federal Research Division 
Library of Congress 
Edited by 
Richard A. Haggerty 
Research Completed 
December 1 990 




On the cover: Oil rigs, Lago de Maracaibo 



Fourth Edition, First Printing, 1993. 

Library of Congress Cataloging-in-Publication Data 

Venezuela : a country study / Federal Research Division, Library of 
Congress ; edited by Richard A. Haggerty. — 4th ed. 

p. cm. — (Area handbook series, ISSN 1057-5294) (DA 
pam ; 550-71) 

"Supersedes the 1976 edition of Area handbook for Venezuela 
written by Howard I. Blutstein, et al." — T.p. verso. 

"Research completed December 1990." 

Includes bibliographical references (pp. 229-250) and index. 

ISBN 0-8444-0747-X 
Copy 3 Z663.275 .V46 1993 

1. Venezuela. I. Haggerty, Richard A., 1954- . II. Blut- 
stein, Howard I., Area handbook for Venezuela. III. Library of 
Congress. Federal Research Division. IV. Series. V. Series: DA 
pam ; 550-71. 

F2308.W4 1993 92-10376 
987— dc20 CIP 



Headquarters, Department of the Army 
DA Pam 550-71 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 



Foreword 



This volume is one in a continuing series of books prepared by 
the Federal Research Division of the Library of Congress under 
the Country Studies/Area Handbook Program sponsored by the 
Department of the Army. The last page of this book lists the other 
published studies. 

Most books in the series deal with a particular foreign country, 
describing and analyzing its political, economic, social, and national 
security systems and institutions, and examining the interrelation- 
ships of those systems and the ways they are shaped by cultural 
factors. Each study is written by a multidisciplinary team of social 
scientists. The authors seek to provide a basic understanding of 
the observed society, striving for a dynamic rather than a static 
portrayal. Particular attention is devoted to the people who make 
up the society, their origins, dominant beliefs and values, their com- 
mon interests and the issues on which they are divided, the nature 
and extent of their involvement with national institutions, and their 
attitudes toward each other and toward their social system and 
political order. 

The books represent the analysis of the authors and should not 
be construed as an expression of an official United States govern- 
ment position, policy, or decision. The authors have sought to 
adhere to accepted standards of scholarly objectivity. Corrections, 
additions, and suggestions for changes from readers will be wel- 
comed for use in future editions. 

Louis R. Mortimer 
Chief 

Federal Research Division 
Library of Congress 
Washington, D.C. 20540 



iii 



Acknowledgments 



The authors wish to acknowledge the contributions of Howard 
I. Blutstein, J. David Edwards, Kathryn Therese Johnston, David 
S. McMorris, and James D. Rudolph, who wrote the 1976 edi- 
tion of Area Handbook for Venezuela. The authors also are grateful 
to individuals in various agencies of the United States government 
and private institutions who gave their time, research materials, 
and special knowledge to provide information and perspective. 
These individuals include Ralph K. Benesch, who oversees the 
Country Studies/ Area Handbook Program for the Department of 
the Army. 

The authors also wish to thank those who contributed directly 
to the preparation of the manuscript. These include Sandra W. 
Meditz, who reviewed all textual and graphic materials, served as 
liaison with the sponsoring agency, and provided numerous sub- 
stantive and technical contributions; Mimi Cantwell, who edited 
the chapters; Marilyn Majeska, who managed editing and produc- 
tion; and Barbara Edgerton, Janie L. Gilchrist, and Izella Wat- 
son, who did the word processing. Cissie Coy performed the final 
prepublication editorial review, and Joan C. Cook compiled the 
index. Linda Peterson of the Library of Congress Printing and 
Processing Section performed phototypesetting, under the super- 
vision of Peggy Pixley. 

Graphics support was provided by David P. Cabitto, who pre- 
pared the maps and charts. He was assisted by Harriett R. Blood 
and Greenhorne and O'Mara. The illustrations for the cover and 
the title page of each chapter were designed by Kimberly Lord. 

In addition, several individuals who provided research support 
are gratefully acknowledged. Tim L. Merrill wrote the geography 
section in Chapter 2, prepared several map drafts, and provided 
sources for several tables included in the Appendix. Janie L. Gil- 
christ filled gaps in the Bibliography. Special thanks are also due 
to Karen Sturges-Vera, who provided both photographs and helpful 
commentary regarding the text. 

Finally, the authors acknowledge the generosity of individuals 
and the public and private agencies who allowed their photographs 
to be used in this study. They are indebted especially to those who 
contributed original work not previously published. 



Contents 



Page 



Foreword iii 

Acknowledgments v 

Preface xi 

Country Profile xiii 

Introduction xxi 

Chapter 1. Historical Setting 1 

James D. Rudolph 

DISCOVERY AND CONQUEST 4 

SPANISH COLONIAL LIFE 6 

THE EPIC OF INDEPENDENCE 8 

A CENTURY OF CAUDILLISMO 12 

THE TRANSITION TO DEMOCRATIC RULE 17 

THE TRIUMPH OF DEMOCRACY 24 

Chapter 2. The Society and Its Environment 39 

Ieda Siqueira Wiarda 

GEOGRAPHY 42 

Topography 42 

Climate 45 

Hydrography 46 

POPULATION DYNAMICS 48 

Population Profile 51 

Migration 53 

Settlement Patterns 55 

SOCIAL STRUCTURE 58 

The Elite 58 

The Middle Class , 59 

The Peasants 61 

The Workers and the Urban Lower Class 62 

ETHNIC GROUPS 63 

MODERNIZATION, SOCIAL VALUES, AND RELIGION . . 66 

SOCIAL WELFARE 70 

Education 70 

Health and Social Security 74 



vii 



Chapter 3. The Economy 79 

Daniel J. Seyler 

GROWTH AND STRUCTURE OF THE 

ECONOMY 81 

ECONOMIC POLICY 84 

Fiscal Policy 84 

Monetary and Exchange-Rate Policies 85 

LABOR 86 

Formal Sector 86 

Informal Sector 89 

AGRICULTURE 89 

Land Policies 90 

Land Use 91 

Crops 92 

Livestock 95 

Farming Technology 95 

Fishing and Forestry 96 

ENERGY AND INDUSTRY 97 

Petroleum 97 

Natural Gas and Petrochemicals 101 

Electricity 103 

Mining 104 

Manufacturing Ill 

Construction 114 

SERVICES 115 

Banking and Financial Services 115 

Transportation 118 

Telecommunications 122 

Tourism 123 

FOREIGN ECONOMIC RELATIONS 124 

Foreign Trade 124 

Balance of Payments 127 

Foreign Debt 128 

Foreign Assistance 130 

Chapter 4. Government and Politics 133 

Howard J. Wiarda and Ieda Siqueira Wiarda 

THE GOVERNMENTAL SYSTEM 137 

Constitutional Development 138 

The Executive 140 

The Legislature 143 

The Judiciary 145 

Public Administration 147 



vin 



Local Government 149 

The Electoral System 151 

POLITICAL DYNAMICS 153 

Political Developments since 1958 153 

Interest Groups and Major Political Actors 155 

Political Parties 162 

Formal and Informal Dynamics of Public 

Policy 164 

The Mass Media 165 

FOREIGN RELATIONS 167 

Chapter 5. National Security 175 

Richard A. Haggerty 

HISTORY OF THE ARMED FORCES 177 

STRATEGIC SETTING 182 

Venezuela and the United States 186 

Venezuela and Colombia 187 

Venezuela and Guyana 189 

Venezuela and Brazil 191 

ROLE OF THE MILITARY IN NATIONAL LIFE 192 

Missions 192 

Manpower 194 

Defense Spending 195 

ARMED FORCES ORGANIZATION, TRAINING, 

AND EQUIPMENT 196 

The Army 198 

The Navy 199 

The Air Force 200 

The Armed Forces of Cooperation 

(National Guard) 201 

Uniforms, Ranks, and Insignia 202 

INTERNAL SECURITY AND PUBLIC ORDER 203 

Threats to Internal Security 203 

Law Enforcement Agencies 208 

The Criminal Justice System 209 

The Prison System 210 

Appendix. Tables 213 

Bibliography 229 

Glossary 251 

Index 255 



List of Figures 

1 Administrative Divisions of Venezuela, 1990 xx 

2 Topography and Drainage 44 

3 Estimated Population by Age and Sex, mid- 1985 54 

4 Employment by Sector, 1989 88 

5 Estimated Gross Domestic Product (GDP) 

by Sector, 1988 90 

6 Petroleum and Mining, 1990 102 

7 Transportation System, 1990 120 

8 Organization of the National Government, 1990 146 

9 Boundary Disputes, 1990 168 

10 Structure of the Armed Forces, 1990 198 

11 Officer Ranks and Insignia, 1990 204 

12 Enlisted Ranks and Insignia, 1990 205 



x 



Preface 



Like its predecessor, this study represents an attempt to treat 
in a compact and objective manner the dominant contemporary 
social, political, economic, and military aspects of Venezuela. 
Sources of information included scholarly books, journals, and 
monographs; official reports of governments and international or- 
ganizations; numerous periodicals; the authors' earlier research and 
observations; and interviews with individuals who have special com- 
petence in Venezuelan and Latin American affairs. Chapter bib- 
liographies appear at the end of the book; brief comments on sources 
recommended for further reading appear at the end of each chap- 
ter. To the extent possible, place-names conform with the system 
used by the United States Board on Geographic Names (BGN). 
Measurements are given in the metric system; a conversion table 
is provided to assist readers unfamiliar with metric measurements 
(see table 1, Appendix). A glossary is also included. 

Although there are numerous variations, Spanish surnames 
generally consist of two parts: the patrilineal name followed by the 
matrilineal one. In the instance of Eleazar Lopez Contreras, for 
example, Lopez is his father's name and Contreras his mother's 
maiden name. In nonformal use, the matrilineal name is often 
dropped. Thus, after the first mention, just Lopez is used. A minori- 
ty of individuals use only the patrilineal name. 



XI 



Country Profile 




Country 

Formal Name: Republic of Venezuela. 
Short Form: Venezuela. 
Term for Citizens: Venezuelan(s). 
Capital: Caracas. 

Geography 

Size: Approximately 912,050 square kilometers. 

Topography: Four well-defined regions — Maracaibo lowlands in 
the northwest, northern mountains stretching from Colombian 
border along the Caribbean Sea, central Orinoco plains (llanos), 
and Guiana highlands in southeast. 



xin 



Climate: Varies from tropical humid to alpine depending on ele- 
vation, topography, and prevailing winds. Rainy season for most 
regions runs from May through November. 

Society 

Population: Estimated 19.7 million in 1990. Extremely high aver- 
age annual growth rate of 3.4 percent from 1950-86; had declined 
to 2.5 percent by 1990. 

Ethnic Groups: About 68 percent of population mestizo (mixed 
race), 21 percent unmixed Caucasian, 10 percent African, and 1 
percent Indian. 

Language: Spanish official language. Indian dialects spoken by 
isolated groups (less than 1 percent of population). 

Religion: Over 90 percent nominally Roman Catholic; approxi- 
mately 5 percent Protestant (mainly evangelical). 

Education and Literacy: Over 88 percent of population fifteen 
years or older considered literate in 1985. Basic education consist- 
ed of nine years of compulsory schooling. Best known and oldest 
university was Central University of Venezuela in Caracas. 

Health: Generally good indicators by Latin American standards. 
In 1990 life expectancy seventy-one years for males, seventy- seven 
for females. Death rate only 4 per 1,000 population, birth rate 28 
per 1,000 population. Average caloric intake 107 percent of mini- 
mum established by Food and Agriculture Organization of the Unit- 
ed Nations. 

Economy 

Gross Domestic Product (GDP): Approximately US$58 billion in 
1988; per capita income roughly US$3,100. Growth has been tied 
to status of world oil market. Strong growth during 1970s was fol- 
lowed by rapid decline in early 1980s. Limited economic reforms 
carried out by administration of President Jaime Lusinchi (1984-89) 
restored modest growth in 1985-88. Broader reforms instituted by 
President Carlos Andres Perez (1989-) likely to hamper growth in 
short term in favor of establishing steady growth pattern in long term. 

Services: Government and other services (including utilities) ac- 
counted for 39.7 percent of GDP in 1988. Commerce accounted 
for additional 19.6 percent. 

Industry: Accounted for a combined 34.8 percent of GDP in 1988. 



xiv 



Subsectors included manufacturing (17.1 percent of GDP), petrole- 
um (12.8 percent), and construction (4.9 percent). Output mostly 
for domestic market except for processed petroleum and minerals. 

Agriculture: Accounted for 5.9 percent of GDP in 1988. Output 
focused almost entirely on domestic market. 

Exchange Rate: Venezuelan bolivar (B) placed on a floating ex- 
change rate in 1989, following a number of official devaluations 
of currency from 1983 to 1989. In late- 1990, exchange rate declined 
to B43 = US$1. 

Exports: Approximately US$10.8 billion in 1989, down severely 
from 1981 peak of US$20.1 billion. Petroleum and petrochemi- 
cals normally accounted for at least 80 percent of export value. 

Imports: Approximately US$10.9 billion in 1988, down from peak 
of US$1 1 .7 billion in 1982. Raw materials represented 44 percent 
of 1988 imports, followed by machinery (26 percent), transporta- 
tion equipment (16 percent), and consumer goods (15 percent). 

Balance of Payments: Deficit of US$4.7 billion in 1988 mainly 
result of falling oil prices. Capital outflows and foreign debt pay- 
ments also contributed to negative balance of payments trend in 
late 1980s. 

Fiscal Year: Calendar year. 

Transportation and Telecommunications 

Roads: In 1988 approximately 76,600 kilometers — 34 percent paved 
(highest percentage in Latin America), 32 percent gravel. Roads 
primary means of transportation for both passengers and cargo. 

Railroads: In 1988 only 400 kilometers carried 240,000 passengers 
and freight over two major routes. Main passenger route from Bar- 
quisimeto to Puerto Cabello. 

Ports: La Guaira, in metropolitan Caracas, leading port. Other 
major ports included Puerto Cabello and Maracaibo. Other seaports 
generally served particular industries. 

Airports: Eleven international airports and some thirty- six domestic 
airports. Major airport Maiquetia international outside Caracas. 

Telecommunications: About 180 radio stations and over 60 tele- 
vision stations in 1988. Approximately 2.8 million television sets. 
About 1.8 million telephone lines served 1.4 million subscribers 
in 1988. Because of inadequate telephone service, some utilities, 
oil companies, and the military maintained their own systems. 



xv 



Government and Politics 



Government: Functioning representative democratic system es- 
tablished in 1958 after ouster of military dictator Marcos Perez 
Jimenez. Constitution of 1961 establishes federal republic of twenty 
states, two federal territories (Amazonas and Delta Amacuro), a 
Federal District (Caracas), and a federal dependency consisting of 
seventy-two islands. Central government divided into executive, 
legislative, and judicial branches. President, who dominates govern- 
mental affairs, elected every five years. Presidents cannot run for 
reelection until two intervening terms (ten years) have passed. 
Carlos Andres Perez (1974-79, 1989-) first president reelected in 
post- 1958 democratic era. Bicameral Congress made up of Senate 
and Chamber of Deputies. Members of Congress serve five-year 
terms, elected from party lists under proportional-representation 
system. Judicial branch headed by Supreme Court of Justice. No 
state or municipal court systems; all courts federal courts. 

Politics: Mainly two-party system. Democratic Action (Accion 
Democratica — AD), which adheres to social democratic line, op- 
posed by Social Christian Party (Comite de Organizacion Polftica 
Electoral Independiente— COPEI). AD and COPEI tended to al- 
ternate in presidential elections until 1989, when AD's Perez suc- 
ceeded fellow AD member Lusinchi. Differences in ideology 
between AD and COPEI slight; both supported generous social 
programs and state-directed industrialization efforts until Perez in- 
stituted significant reforms in 1989. COPEI' s foreign policy ap- 
proach somewhat more conservative than AD's. Political campaigns 
characterized by significant levels of expenditure, particularly on 
mass media. 

International Relations: International outreach and leadership 
in forums such as United Nations and Organization of American 
States during 1970s diminished in 1980s as result of economic 
problems. Foreign policies sought to promote oil exports, to en- 
courage democracy in other countries, and to maintain political 
stability in the Caribbean and South America. Unsettled border 
disputes with Colombia (in the Golfo de Venezuela) and Guyana. 
Other concerns with regard to Colombia included illegal immigra- 
tion, drug trafficking, and spillover of Colombian insurgent/terrorist 
groups. Generally close ties with United States. 

International Agreements and Membership: Party to Inter- 
American Treaty of Reciprocal Assistance (Rio Treaty) and Treaty 
for the Prohibition of Nuclear Weapons in Latin America (Tlatelolco 
Treaty). Also member of numerous international organizations, 



xvi 



including Organization of American States, United Nations and 
its specialized agencies, Andean Common Market, Organization 
of the Petroleum Exporting Countries, World Bank, Inter- 
American Development Bank, Latin American Integration Associ- 
ation, and Nonaligned Movement. 

National Security 

Armed Forces: In 1990 total strength of the National Armed Forces 
(Fuerzas Armadas Nacionales — FAN) estimated at 69,000, broken 
down into 34,000 army personnel, 10,000 navy, 5,000 air force, 
and 20,000 Armed Forces of Cooperation (Fuerzas Armadas de 
Cooperation — FAC) — also known as the National Guard. 

Military Units: Army organized into five divisions, one for each 
military region, several independent units in capital area. Navy 
included main squadron at Puerto Cabello, marine infantry corps, 
naval aviation command, River Forces Command, and Coast 
Guard. Air Force organized into three commands: Air Combat 
Command, Air Logistics Command, and Air Training Command. 

Equipment: Armor and artillery assets somewhat antiquated. 
Major naval vessels — including British-built Constitution-class fast 
attack craft, Italian Lupo missile frigates, and German Type 209 
submarines — purchased during 1970s. Air Force equipped with 
most modern weaponry, including United States F-16 and French 
Mirage fighters. 

Police: FAC functioned as paramilitary internal security force at 
national level. Other federal police organizations included Direc- 
torate of Intelligence and Prevention Services (Direction de 
Seguridad e Inteligencia Policial — Disip) under Ministry of Interior, 
Technical and Judicial Police (Policfa Tecnica y Judicial — PTJ) 
under Ministry of Justice, and Traffic Police under Ministry of 
Transport and Communications. These three organizations totaled 
some 8,000 personnel in 1990. Some 18,000 personnel in state, 
metropolitan, and municipal police forces exercised local jurisdic- 
tion. Largest such force was Metropolitan Police Force of Cara- 
cas, with about 9,000 members. 



xvn 



12 



^68 
NETHERLANDS 
ANTILLES 




f Maracaibo * 



/ 

^••'V Logo 

\ Maracaibo 

/ a Merida , 

X<- 22 ' 

. 'San ^ . y 
SCristobal/ / 



^ parcfuisimeto 'is 
truiillo » 

16®/ 17 

J - v Guanare 

" ® " ! ""*-V 



i V ^Marac 

@San >San 
Car/os \ cte / 
-|4 V Mor 

1 j 



Barinas 

18 



..A 



Sa/7 Fernando 



21 



Administrative 
Divisions 



States or Territories 

Amazpnas Territory (20) 
Anzoategui (12) 
Apure (21) 
Aragua (5) 
Barinas (18) 
Bolivar (19) 
Carabobo (4) 
Cojedes (14) 

Delta Amacuro Territory (10) 

Falcon (2) 

Federal District (6) 

Guarico (13) 

Lara (15) 

Merida (22) 

Miranda (7) 

Monagas (11) 

Nueva Esparta (9) 

Portuguesa (17) 

Sucre (8) 

Tachira (23) 

Trujillo (16) 

Yaracuy (3) 

Zulia (1) 



COLOMBIA 



- 



Figure 1. Administrative Divisions of Venezuela, 1990 



xx 



Introduction 



VENEZUELA IS A COUNTRY that has glimpsed the prosperity 
that tantalizes so many developing nations. Unfortunately, however, 
global economic trends and domestic problems combined to nulli- 
fy the economic gains of the mid-1970s and to push the country 
into the economic crisis of the 1980s. Although blessed with an 
abundance of petroleum and other natural resources, Venezuela 
has been hampered by corruption, mismanagement, and com- 
placency on the part of government officials. 

Historically, Venezuela has been in many ways a leader among 
Latin American nations. The liberation of colonial South America 
from Spanish rule owed much to the vision of Venezuelans such 
as Francisco de Miranda and Simon Bolivar Palacios. The nation's 
postindependence domination by a succession of caudillos was typi- 
cal of the pattern followed in most of the former colonies. Indeed, 
until the discovery of oil reserves during the regime of caudillo Juan 
Vicente Gomez (1908-35), Venezuela was a prototypical, almost 
stereotypical, Latin American society, with an agrarian economy, 
an elitist social and economic structure, and a tradition of military 
rule. The transformation of society that followed in the wake of 
expanding oil production, however, produced a more educated and 
politically aware middle class. Representatives of this class, mem- 
bers of the Generation of 1928, led the protest movements that even- 
tually brought democracy to Venezuela in 1945. The reactionary 
regime of Marcos Perez Jimenez (1948-58) appeared to represent 
the last gasp of the old system. 

Socially, Venezuelans benefited to a significant degree from the 
oil boom years of the 1970s. Per capita income became the highest 
in Latin America, literacy rates climbed, and the standard of liv- 
ing rose for many Venezuelans. Beneath the bright veneer, how- 
ever, nagging problems festered. Poverty persisted for many. Even 
for many in the middle class, the prevailing system provided an 
artificial and impermanent brand of prosperity. The bloated govern- 
ment bureaucracy and heavily protected domestic industries provid- 
ed employment, but they also strained the resources of a nation 
heavily dependent on the export of a single volatile commodity. 
When the bill for years of wasteful spending came due in the 1980s 
and 1990s, many Venezuelans began to experience a kind of per- 
sonal privation from which they had previously considered them- 
selves immune. 



xxi 




Figure 1. Administrative Divisions of Venezuela, 1990 



Economically, Venezuela was a beacon for other Latin Ameri- 
can states, a beacon that both attracted emulation and warned of 
potential danger. The national petroleum company, Venezuelan 
Petroleum Corporation (Petroleos de Venezuela, S.A. — PDVSA), 
was a world-class multinational corporation. The country was also 
a leading producer of natural gas and petrochemicals. By 1990 
Venezuela met half of its electricity needs from hydroelectric produc- 
tion, and significant potential power generation remained to be 
tapped from this source alone. The production of other industries, 
such as bauxite, iron, aluminum, steel, and gold, appeared poised 
for expansion during the 1990s if sufficient capital and infrastruc- 
ture support could be secured. Yet by the 1990s, it had become 
clear that the public sector, saddled with an oppressive external 
debt and still reliant on income from the stagnant oil market, could 
not stimulate the economic growth required in the next century. 

By the 1990s, Venezuelan politics had changed considerably since 
the reestablishment of democracy in 1958. A two-party system, 
pitting the social democratic Democratic Action party (Accion Dem- 
ocratica — AD) against the Social Christian Party (Comite de Or- 
ganizacion Polftica Electoral Independiente — COPEI), gradually 
took hold, offering an alternative to direct military interference in 
the nation's governance. Eventually, the influence of the political 
parties on many different spheres of life — labor unions, public-sector 
employment, and the military, among others — came to shape and 
define Venezuelan life to a significant degree. Beyond its borders, 
Venezuela also became a leader and an example in both regional 
and global forums. Oil-rich and politically stable, the nation sought 
to shape global policy under such activist presidents as Rafael Cal- 
dera Rodriguez (1969-74) and Carlos Andres Perez (1974-79; 
1989- ). Economic crisis, however, curtailed such activism in the 
1980s and dimmed Venezuela's star somewhat in the internation- 
al firmament. 

The Venezuelan military, the National Armed Forces (Fuerzas 
Armadas Nacionales — FAN), had also developed since 1958. By 
the early 1990s, the FAN had become a more professional, better- 
trained, better-equipped, and better-disciplined force than it was 
under the regime of Perez Jimenez. Nevertheless, although the FAN 
was technically removed from politics, it was not an apolitical in- 
stitution. Members of the officer corps were known by their party 
inclinations, and the fortunes of careers rose and fell with the tides 
of the national balloting. By the 1990s, however, the role of the 
military no longer appeared to be that of political arbiter, even 
though participants in the surprising and unsuccessful military coup 
against President Perez in February 1992 appeared to be at least 



xxii 



partially motivated by a desire to return to such a role. Therefore, 
the true role of the military was subject to debate. Most signs indi- 
cated that the majority of Venezuelans respected military person- 
nel for their professionalism and their traditional image as 
guarantors of stability and national sovereignty. At the same time, 
however, the absence of a viable external threat (Venezuela has 
never fought a war outside its own borders) undercut the FAN's 
most vital raison d'etre. Although internal security was in fact a 
mission of the FAN, it was not one about which the institution was 
particularly proud or enthusiastic. With the waning of the global 
communist threat and the slow disintegration of the regime of Fidel 
Castro Ruz in Cuba, the FAN will be forced to reassess both its 
strategic assumptions (e.g., the need to maintain a capability to 
project power in the Caribbean Basin region; see Glossary) and 
its order of battle during the 1990s and beyond. 

Venezuelan society faced a similar reassessment. By 1992 the 
old assumptions about the nation's future appeared to be no longer 
valid. Despite impressive reserves, oil-based growth had proved 
to be as erratic as that based on any other commodity. The social 
welfare system, adequate under normal economic conditions, 
proved insufficient to provide for the basic needs of many Venezue- 
lans under the extraordinary circumstances that prevailed under 
the second Perez administration. 

President Perez returned to the country's leadership vowing to 
restructure an economic system that had appeared quite prosper- 
ous and successful during his first term. True to his word, Perez 
proceeded to implement policies aimed at opening the Venezue- 
lan economy and reducing state intervention, control, and subsi- 
dies that distorted that economy's performance. As was true 
elsewhere in Latin America and in Eastern Europe, however, these 
major policy adjustments, among them elimination of subsidies and 
devaluation of the currency, inflicted suffering on the majority of 
the population, especially the poor. Privatization of state-owned 
industry also entailed hardship for both lower- and middle-class 
workers whose jobs were lost in the transition to private ownership. 

The irony of the domestic economic program lay in the fact that, 
macroeconomically, Perez's policies produced positive results rather 
rapidly. During the first half of 1991, the gross domestic product 
(GDP — see Glossary) grew at a very healthy 10-percent annual rate. 
The administration actually needed to slow the economy down 
somewhat by cutting back on public spending in order to avoid 
boosting inflation. Accordingly, the monthly rate of increase in 
prices slowed from 3.1 percent in July to 1.9 percent in Septem- 
ber. Overall, projections held that the country's oil-related GDP 



xxin 



would increase by an impressive 8.7 percent and that non-oil GDP 
would follow close behind at 7.7 percent. Unemployment figures 
also showed a positive trend, with overall unemployment dropping 
from 10.9 percent in 1990 to 10.3 percent during the first half of 
1991. One worrisome element in the positive trends was that some 
portion of the increased growth rate was attributable to a rise in 
world oil prices. 

If many Venezuelans complained privately about economic con- 
ditions and the performance of the government, groups such as 
labor unions and university students took their grievances to the 
street. Some of the worst of these disturbances took place in Novem- 
ber 1991. On November 7, the main labor confederations called 
for a twelve-hour general strike to press their demands for a repeal 
of gasoline price increases, approval of a wage increase equal to 
30 percent of inflation, a reorganization of the social security sys- 
tem, and a halt to the planned dismissal of 300,000 government 
employees. The actions were effective, slowing transportation and 
economic activity in Caracas, Aragua, Bolivar, and Carabobo. 
Rioting reportedly broke out in the state of Bolivar. Confronta- 
tions between police and student protesters in Caracas on November 
20 left three dead. 

Another assumption about Venezuelan society — that drugs were 
strictly a Colombian problem — also fell victim to the events of the 
1990s. It remained true that the major drug organizations operated 
out of Colombia. By the early 1990s, however, their encroachment 
into Venezuela, an encroachment that Caracas once viewed as no 
more than a minor irritant, had become significant. Colombian 
drug traffickers, under increasing pressure at home, began to ex- 
pand their operations into Venezuela. The porous frontier region 
between the two countries had always facilitated some level of smug- 
gling, illegal immigration, and guerrilla movement. The intensity 
of transshipment and money laundering activity, however, rose 
dramatically as the Cali Cartel, allegedly with the assistance of 
Sicilian organized crime families, began to exploit the infrastruc- 
ture of Venezuela's export-minded economy. The drug dealers 
also reportedly benefited from contacts with corrupt Venezuelan 
politicians. As a result, estimated annual cocaine exports to the 
United States through Venezuela rose from 88 tons in 1990 to 
perhaps 220 tons in 1991 . In addition to the possibility of increased 
domestic drug consumption, the rapid expansion of this illicit com- 
merce threatened to eat away at the foundations of a society al- 
ready suffering from the effects of the government's economic shock 
program. 



xxiv 



Despite domestic criticism, Perez continued, during his second 
term in office, the foreign activism that had marked his first. The 
president was a prominent voice in the debate over what policy 
approach Western Hemisphere nations should take with regard to 
Fidel Castro's Cuba in light of the collapse of communism in 
Eastern Europe and the Soviet Union. Perez argued in favor of 
expanded ties with Cuba in order to promote democracy in the 
island nation. Perez also sought to expand economic cooperation 
with Colombia and moved to allow tariff-free imports into the 
Venezuelan market from the islands of the Caribbean. The presi- 
dent's most visible gesture took place in late September 1991 , when 
he accepted as an exile the ousted president of Haiti, Jean-Bertrand 
Aristide. The administration strongly supported Aristide, a Ro- 
man Catholic priest and a devotee of liberation theology (see Glos- 
sary), and helped push for the embargo of Haiti eventually adopted 
by the Organization of American States (OAS). 

In the immediate aftermath, it was not clear what factors exer- 
cised the most influence over the participants in the attempted mili- 
tary coup of February 4, 1992. The first news of the uprising came 
as a shock to observers outside of Venezuela. Coup rumors ap- 
parently had been circulating for some time in Caracas; most 
Venezuelans had heard such talk before, however. Shortly after 
midnight, troops from at least five army units attacked key sites 
in the capital and three other cities. One objective of the attacks 
was to assassinate the president. Reportedly, some small arms 
rounds did strike the president's office, even leaving bullet holes 
in his desk. The high command and the overwhelming majority 
of FAN units remained loyal to Perez, however, and quelled the 
uprising within twenty-four hours. 

In many ways, the aftermath of the coup attempt proved more 
interesting than the insurrection itself. Although not supported by 
the majority, the conspiracy apparently had attracted a significant 
number of mid-level officers (captains through lieutenant colonels), 
including many young officers considered to be the "best and 
brightest" in the FAN. The conspiracy's leader, Lieutenant Colonel 
Hugo Chavez Frias, seemingly struck some resonant national chords 
with his postcapitulation statements condemning the corruption and 
indifference of the government. Some of the residents of Caracas 's 
ranchos (see Glossary), or slums, expressed sympathy with the re- 
bellious soldiers. Some members of the middle class echoed those 
sentiments. Just as the population at large resented perceived cor- 
ruption among the government leadership and the bureaucracy, 
so too did military personnel harbor bitterness toward those at the 
top. The tightening of the defense budget, combined with the general 



xxv 



economic woes, also had had an impact on the military. Lower- 
ranking officers and enlisted personnel, who once had believed that 
their comparatively comfortable standard of living was secure, in- 
creasingly objected to the prosperity of their general officers, a 
prosperity allegedly based on corruption. If nothing else, the coup 
attempt almost certainly will prompt heightened attention from the 
government to military pay and perquisites. 

Perez publicly vowed to maintain his economic policies despite 
the coup attempt and marked absence of popular support for his 
government. It appeared likely, however, that government spending 
on social programs would increase in an effort to respond to popu- 
lar discontent. The return to prosperity, if it can be achieved, will 
have to be accomplished equitably. As of the early 1990s, however, 
that appeared to be a difficult and demanding task. 

March 30, 1992 

* * * 

Venezuela continued to suffer from unusual manifestations of 
political instability as 1993 approached. Public demonstrations 
against the Perez government became regular events. Discussion 
of Perez's stepping down before the end of his five-year term in 
February 1994 was commonplace, not only in the media and among 
the population, but also among members of Congress. Lieutenant 
Colonel Chavez, the leader of the February 4, 1992, military coup 
attempt, assumed the status of a cult figure among Venezuelans 
who identified with his public statements condemning government 
corruption. Although coup rumors have long been a staple of 
Venezuelan political life, such speculations now carried more weight 
than they had hitherto. This climate reflected a regression of sorts 
in what had been considered one of Latin America's most stable 
and progressive democracies. Where once the military had pub- 
licly supported civilian rule while privately reserving the preroga- 
tive of political action to preserve its own interests, the post-February 
4 military openly stood as the arbiter of power, the last and loudest 
voice in the debate over the country's political future. This state 
of affairs showed clearly in a May 1992 opinion poll, in which 86 
percent of respondents believed a new coup attempt was likely or 
possible; 84 percent thought that the Perez administration had failed 
to bring about significant changes in economic and social policy; 
and 44 percent expressed the opinion that the military actually ran 
the country, as apposed to the 9 percent who felt that Perez did 
so. In another disturbing statistic, a remarkably high 17 percent 
of respondents said that Lieutenant Colonel Chavez should replace 



xxvi 



Perez. Chavez came in second in this category, trailing only former 
president Rafael Caldera. 

The continuation of popular discontent seemed to reflect the pub- 
lic 's skepticism toward Perez's efforts to shore up his rule in the 
wake of the coup attempt. Some of the measures initiated or an- 
nounced by the president included a temporary halt to monthly 
increases in gasoline prices; a freeze on electricity rates; price con- 
trols on food staples; a surtax on luxury goods; increased govern- 
ment priority to public services, crime prevention, education, and 
agriculture; and the creation of a special fund to promote the con- 
struction of middle-class housing. Perez even floated the idea of 
a constituent assembly election, with the goal of drafting a new 
constitution. In an effort to broaden his government's support, 
Perez also brought two members of the opposition COPEI party 
into the cabinet; he also replaced five of nine Supreme Court justices 
in response to widespread public perceptions of the corruption and 
ineffectiveness of the Venezuelan justice system. In addition, Pe- 
rez promised to crack down on government corruption. These 
pronouncements appeared to be widely regarded as lip service, 
however. One statement in particular prompted derisive comments 
from the media and the public. "Since the beginning of my term," 
stated Perez, "there have been no important or significant cases 
of corruption." 

Public demonstrations, mainly keyed to government economic 
policy or the issue of corruption in general, began in early March 
but continued on a regular basis. Although student groups and other 
radical factions organized the majority of the demonstrations, they 
drew significant participation from the middle class, often in the 
form of banging pots and pans, either in the streets or from open 
apartment windows. The government's reaction to the demonstra- 
tions was troubling. Spokesmen routinely dismissed or condemned 
them as the work of "subversives." Police sometimes employed 
tear gas and truncheons to break up the larger assemblies. Although 
officials displayed concern over the implications of public protest, 
an even more worrisome phenomenon soon appeared, that of ter- 
rorism. 

On September 23, 1992, two gunmen opened fire on AD con- 
gressional deputy Antonio Rfos near the headquarters of the Con- 
federation of Venezuelan Workers (Confederation de Trabaj adores 
de Venezuela — CTV) in Caracas. Although badly wounded, Rfos 
survived. Police captured his assailants, who claimed to be mem- 
bers of a group calling itself the Bolivarian Movement. The move- 
ment reportedly had a "hit list" of corrupt political figures whom 
it intended to eliminate. On September 27, assailants hurled a small 



xxvii 



explosive device at the home of former president Jaime Lusinchi. 
The Bolivarian Movement subsequently claimed responsibility. 
These isolated incidents served as a backdrop for what may have 
been an attempt on Perez's life on October 12 in the town of 
Paraguaipoa near the Colombian border. Accounts of the incident 
differed, and the government vehemently denied that there had 
been an assassination attempt. Apparendy, two local residents drove 
their truck through heavy security and struck the president's bus. 
The occupants of the truck died in a hail of automatic weapons 
fire from presidential security personnel. Bystanders also suffered 
gunshot wounds. Although the incident may have been only the 
work of "two drunks," as the president maintained, it heightened 
political tensions nonetheless. The following day, the bolivar (B; 
for value of the bolivar — see Glossary) fell sharply against the United 
States dollar, and the Venezuelan stock market also fell. 

Despite the fluctuations of the currency and the stock exchange, 
Venezuela's economic news was not entirely negative. Real growth 
in the GDP was 10.4 percent in 1991, one of the best economic 
growth figures for any significant economy in the world. The 
prospect of free-trade agreements with the Caribbean Communi- 
ty and Common Market (Caricom) and with Chile promised to 
increase non-oil exports. At the same time, however, the oil in- 
dustry continued to suffer from stagnant prices and excessive debt. 
Ever more voices began to call for PDVSA to convert from its state- 
owned status to that of a publicly traded corporation, with foreign 
investment allowed, at least to some extent. Like the country as 
a whole, PDVSA appeared to be suffering from stagnation and 
corruption, and was badly in need of innovative thinking in order 
to maintain its place in a rapidly changing world. 



October 26, 1992 

* * * 

The president's position continued to deteriorate during late 
1992. Recalcitrant military elements staged another coup attempt 
on November 27, and COPEI handily defeated AD in gubernatorial 
elections held on December 6. The coup attempt, which left an 
estimated fifty dead and hundreds wounded, appeared to have been 
instigated by the same movement of young officers who had 
launched the previous golpe in February. The fighting, marked by 
crude bombing attempts against the presidential palace from light 



xxviii 



aircraft manned by rebel pilots, began early on the morning of 
November 27. Simultaneously a captured state-run television sta- 
tion broadcast a videotaped appeal for public support by Febru- 
ary coup leader Chavez. The uprising was short-lived. Perez 
announced some ten hours after the coup attempt began that the 
capital was secure and that he had dispatched an armored unit to 
Maracay to help put down resistance there. The motivations for 
the uprising appeared to be similar to those cited in February. The 
leadership of the November coup, however, apparendy included 
at least two flag- rank officers, an indication of growing discontent 
within the FAN. The violence of the second coup attempt served 
as a graphic reflection of the population's rejection of Perez's 
presidency and its disillusionment with the democratic system as 
a whole. The December 6 elections further illustrated this senti- 
ment: early returns indicated that AD had lost between four and 
seven of its previous eleven state governorships. As usual in 
Venezuelan politics, the major opposition party proved the primary 
beneficiary of the ruling party's troubles: COPEI appeared to have 
picked up the governorships that AD lost. Although much in 
Venezuela was in crisis, the two-party system, at least, remained 
intact. 



December 9, 1992 Richard A. Haggerty 



xxix 



Chapter 1. Historical Setting 



Statue of Simon Bolivar Palacios in Caracas 



THE TERRITORY THAT BECAME Venezuela lay outside the 
geographical boundaries of the great pre-Hispanic civilizations of 
Central and South America. And although it was the first locale 
in which Christopher Columbus set foot on the mainland of the 
New World, Venezuela was of only marginal consequence within 
the Spanish American empire during most of the next three cen- 
turies. It was not until the late eighteenth century that the colonial 
region that encompassed present-day Venezuela provoked, thanks 
to growing agricultural and trading activity under the auspices of 
the Caracas Company, more than minor interest from the Span- 
ish crown. 

Venezuela's historical significance perhaps reached its peak dur- 
ing Spanish America's struggle for independence during the early 
nineteenth century. In 1810 it became the first colony formally to 
declare its independence. Venezuela also provided Latin America 
with its greatest hero of that era, and perhaps of all time, in Si- 
mon Bolivar Palacios. Bolivar, known as "The Liberator," played 
the leading role in expelling the Spanish colonial authorities not 
only from Venezuela, but also from Colombia, Ecuador, Peru, and 
Bolivia. He died in 1830, tragically broken after having seen his 
dream of Latin American unity shattered by the realities of regional 
caudillismo (rule by local strongmen, or caudillos). 

Venezuela remained marginal primarily because it lacked 
deposits of gold, silver, or the precious stones that constituted 
Spain's fundamental interest in the New World. No useful pur- 
pose existed during colonial times for the petroleum — dubbed "the 
devil's excrement" by early Spanish explorers — that oozed out of 
the ground near Lago de Maracaibo. Venezuela's growing prosperi- 
ty toward the end of the colonial era was based instead on its 
flourishing production and trade of cocoa. When the ravages of 
Venezuela's independence struggle combined with a collapse in 
the international market to put an end to Venezuela's cocoa 
"boom," coffee became the nation's principal export. This second 
phase in Venezuela's agricultural export economy lasted nearly a 
century, until petroleum became king with the popularization of 
the internal combustion engine in the early twentieth century. 

The petroleum industry in Venezuela began under the control 
of foreign firms. Beginning in the 1930s, it gradually came under 
the government's authority. The nationalization of the remaining 
assets of the foreign oil firms in 1976 represented the culmination 



3 



Venezuela: A Country Study 

of full government control. Nonetheless, the government had lit- 
tle effect on the international price of crude oil, despite the efforts 
of the Organization of the Petroleum Exporting Countries (OPEC), 
of which Venezuela was a founding member. Fluctuations in the 
price of oil during the 1970s and 1980s exercised a commanding 
impact on the political as well as the economic life of the nation. 

In stricdy political terms, Venezuela's republican history exhibits 
a seeming incongruity between the instability and dictatorial rule 
of the period prior to 1935 and the stability of its post- 1958 democra- 
cy. Scholars have posited a variety of explanations for this fortui- 
tous transformation, most of which cite the usefulness of vastly 
increased petroleum revenues that allowed the state to address the 
demands of virtually every politically active sector of society. The 
marked decline in petroleum revenues during the 1980s therefore 
placed significant strains on this political system, which for over 
two decades had been the envy of the other nations of Latin 
America. 

Discovery and Conquest 

Christopher Columbus first sighted Venezuela during his third 
voyage to the New World, when he saw the Peninsula de Paria 
from his ship at anchor off the coast of the island of Trinidad (see 
fig. 2). Three days later, on August 1, 1498, Columbus became 
the first European to set foot on the South American mainland. 
Unaware of the significance of his discovery and of the vastness 
of the continent, he christened the territory Isla de Garcia. He spent 
the next two weeks exploring the Orinoco Delta. Fascinated with 
the vast source of fresh water and the pearl ornaments of the na- 
tive population, Columbus believed that he had discovered the 
Garden of Eden. 

A second Spanish expedition, just one year later, was led by Al- 
fonso de Ojeda and the Florentine Amerigo Vespucci. They sailed 
westward along the coast of Tierra Firme (as South America was 
then known) as far as Lago de Maracaibo. There, native huts built 
on piles above the lake reminded Vespucci of Venice, thus lead- 
ing him to name the discovery Venezuela, or Little Venice. Sub- 
sequent expeditions along the north coast of South America were 
driven largely by a lust for adventure, power, and, especially, 
wealth. 

Pearls and rumors of precious metals were the initial attraction 
of Venezuela. By the 1520s, however, the oyster beds between Cu- 
mana and the Isla de Margarita — at the western end of the Penin- 
sula de Paria — had been played out. The next of Venezuela's native 
riches to be extracted by the Spanish was its people. Slave raiding, 



4 



Historical Setting 



which began in the Peninsula de Paria and gradually moved in- 
land, helped supply the vast labor needs in Panama and the Carib- 
bean islands, where gold and silver bullion from Mexico and Peru 
were transshipped. These slave raids engendered intense hatred 
and resentment among Venezuela's native population, emotions 
that fueled more than a century of continual low-intensity warfare. 
Partly as a result of this warfare, the conquest of Venezuela took 
far longer than the rapid subjugations of Mexico and Peru. 

The prolonged nature of the conquest of Venezuela was also at- 
tributable to the area's lack of precious metals and the absence of 
a unified native population. Venezuela had low priority compared 
with regions of Spanish America containing vast ore deposits. 
Moreover, the territory that comprises present-day Venezuela con- 
tained no major political force, such as the Inca or Aztec leader- 
ship, whose conquest would bring vast resources and populations 
under Spanish domain. Rather, the conquerors found a large num- 
ber of relatively small and unrelated tribes of widely varying degrees 
of cultural sophistication. Some were nomadic hunters and gatherers; 
others built cities and practiced advanced agricultural techniques, 
including irrigation and terracing. A number of coastal commu- 
nities were reputed to be cannibalistic. One of the more advanced 
tribes, the Timoto-Cuica, was from the Andean region. The 
Timoto-Cuica (who apparently were not united, but rather com- 
prised a series of "chiefdoms") built roads and traded with the 
populations of the llanos (see Glossary), or plains, to the southeast, 
and the Maracaibo Basin, to the northwest. 

Spanish slavers established bases at Coro and El Tocuyo, south 
of Barquisimeto, in the western part of present-day Venezuela. In 
1528, however, they were dislodged by a most unlikely competi- 
tor; a consortium of German bankers led by the House of Welser, 
a German banking firm, had been granted a concession by the 
deeply indebted Spanish crown to exploit the area's resources. For 
the next twenty-eight years, a series of German governors ad- 
ministered western Venezuela and engaged in a futile search for 
the fabled riches of El Dorado. The Germans showed no interest 
in settling the territory. Rather, they tried to extract from it the 
maximum amount of human and material wealth as rapidly as pos- 
sible. In 1556 the House of Welser' s contract was terminated. The 
group had grown tired of its vain search for a mountain of gold 
to match what the Spanish had discovered in Peru and Mexico, 
and the Spanish had become equally weary of the behavior of their 
German concessionaires, which was ruthless even by the ignoble 
standards of the conquerors. 



5 



Venezuela: A Country Study 



Spanish explorers, in the meantime, pushed eastward from El 
Tocuyo, founding Valencia in 1555. After more than a decade of 
fierce fighting with the recalcitrant native population, forces un- 
der Diego de Losada established the settiement of Santiago de Leon 
de Caracas in 1567. The value of Caracas lay not only in the fer- 
tile agricultural lands in its vicinity, but also in its accessibility, 
through the coastal range, to the seaport that would later become 
La Guaira. 

The vast majority of what is today the territory of Venezuela 
was left untouched by the Spanish conquistadors. Instead, tireless 
Franciscan and Capuchin missionaries explored and Hispanicized 
the Rio Unare Basin to the east of Caracas, the Rio Orinoco, and 
much of the Maracaibo Basin during the seventeenth and eigh- 
teenth centuries. Much of the western llanos and the south bank 
of the Orinoco remained unknown territory to the Spanish even 
at the close of the colonial period. 

Spanish Colonial Life 

Colonial Venezuela's primary value to Spain was geographic: 
its long Caribbean coastline provided security from foreign ene- 
mies and pirates for the Spanish bullion fleet during its annual 
journey between Portobelo, in present-day Panama, and Cuba. 
Venezuela's own form of mineral wealth, petroleum, was noticed 
as early as 1500, but after being hastily scrutinized, the country's 
vast deposits were ignored for nearly four centuries. 

Venezuela lacked political unity for the first two and a half cen- 
turies of colonial rule, in part because it was of no economic im- 
portance to the Spanish officials. Before 1777, what we today label 
Venezuela consisted of a varying number of provinces that were 
governed quite independently of one another. These provinces were 
administered from neighboring colonies that the Spanish considered 
more important. Beginning in 1526, the provinces came under the 
jurisdiction of the Audiencia de Santo Domingo. Then in 1550 their 
colonial administrative seat moved to the Audiencia de Santa Fe 
de Bogota, which in 1718 was upgraded to become the Viceroyalty 
of New Granada. During most of the remainder of the eighteenth 
century, what is today Venezuela consisted of five provinces: Cara- 
cas, Cumana, Merida de Maracaibo, Barinas, and Guayana. Be- 
cause these provinces were far from each other and from the centers 
of Spanish colonial rule, their municipal officials enjoyed a degree 
of local autonomy unknown in most of Spanish America. 

By the late sixteenth century, agriculture had become Venezuela's 
chief economic activity. The rich farmlands of the Andean region, 
the western llanos, and especially the fertile valleys surrounding 



6 



Historical Setting 



Caracas made Venezuela agriculturally self-sufficient, and also 
provided a surplus of a number of products for exportation. Wheat, 
tobacco, and leather were among the early products exported from 
colonial Venezuela. The Spanish crown, however, showed little 
interest in Venezuela's agriculture. Spain was obsessed with extract- 
ing precious metals from its other territories to finance a seemingly 
endless series of foreign wars. As a result, as late as the early eigh- 
teenth century, Venezuela sold the bulk of its considerable surplus 
of agricultural goods to British, French, or Dutch traders, who, un- 
der the Spanish crown's medieval notions of commerce based on 
bureaucratic control and mercantilism, were labeled as smugglers. 

Starting in the 1620s, cocoa became Venezuela's principal ex- 
port for the next two centuries. Cocoa, a powder containing a mild 
stimulant used in the processing of chocolate, was a native product 
of Venezuela's coastal valleys. Its impact on colonial Venezuelan 
society was immense. Its sizable profits attracted, for the first time, 
significant immigration of Spaniards, including relatively poor Ca- 
nary Islanders, and its plantation culture created a great demand 
for African slaves during the seventeenth and early eighteenth cen- 
turies. These two population groups would complete a social hier- 
archy that became virtually a caste system. On top was a small 
elite of white peninsulares (those born in Spain) and criollos (those 
born in America of Spanish parentage); they were followed by the 
white Canary Islanders, who typically worked as wage laborers. 
Next came a large group of racially mixed pardos (see Glossary), 
who by the late eighteenth century made up more than half the 
total; they were followed by African slaves, who constituted about 
20 percent of the population; and, lastly, by the Indians. The na- 
tive population, decimated by slavery and disease throughout the 
colonial period, constituted less than 10 percent of the total popu- 
lation at independence. 

Enormous profits obtained from the triangular trade of African 
slaves for Venezuelan cocoa, which was then shipped across the 
Caribbean and sold in Veracruz for consumption in New Spain 
(Mexico), made the Venezuelan coast a regular port of call for 
Dutch and British merchants. In an effort to eliminate this illegal 
intercolonial trade and capture these profits for itself, the Spanish 
crown in 1728 granted exclusive trading rights in Venezuela to a 
Basque corporation called the Real Compama Guipuzcoana de 
Caracas, or simply the Caracas Company. 

The Caracas Company proved quite successful, initially at least, 
in achieving the crown's goal of ending the contraband trade. 
Venezuela's cocoa growers, however, became increasingly dissatis- 
fied. The Basque monopoly not only paid them significantly lower 



7 



Venezuela: A Country Study 



prices but also received favored treatment from the province's 
Basque governors. This discontent was evidenced in the growing 
number of disputes between the company and the growers and other 
Venezuelans of more humble status. In 1749 the discontent erupted 
into a first insurrectionary effort, a rebellion led by a poor immigrant 
cocoa grower from the Canary Islands named Juan Francisco de 
Leon. The rebellion was openly joined by the Venezuelan lower class- 
es and quietiy encouraged by the elite in Caracas. Troops from Santo 
Domingo and from Spain quickly crushed the revolt, and its leader- 
ship was severely repressed by forces headed by Brigadier General 
Felipe Ricardos, who was named governor of Caracas in 1751. 

The growth of the cocoa trade, the success of the Caracas Com- 
pany, and the assertion of the royal will manifested by the sup- 
pression of the 1 749 revolt all helped to centralize the Venezuelan 
economy around the city of Caracas. In recognition of this growth, 
Caracas was given political-military authority as the seat of the Cap- 
taincy General of Venezuela in 1777, marking the first instance 
of recognition of Venezuela as a political entity. Nine years later, 
its designation was changed to the Audiencia de Venezuela, thus 
granting Venezuela judicial-administrative authority as well. 

Barely three decades later, however, Venezuela would suddenly — 
after almost three centuries on the periphery of the Spanish Ameri- 
can empire — find itself at the hub of the independence movement 
sweeping Latin America. Present-day Venezuelans continue to take 
pride in having produced not only Francisco de Miranda, the best 
known of the precursors of the Spanish American revolution, but 
also the first successful revolt against Spanish rule in America and, 
of course, the leading hero of the entire epic of Latin America's 
struggle for independence, Simon Bolivar Palacios. 

The Epic of Independence 

Miranda was born in Caracas of wealthy criollo parents in 1750. 
Following a checkered career in the Spanish Army, Miranda spent 
virtually the rest of his life living in nations that were at odds with 
Spain, seeking support for the cause of the independence of his 
native Spanish America. Although he was a professed admirer of 
the newly independent United States, Miranda's political vision 
of Latin America, beyond independence, remained equivocal. In 
1 806 he led an expedition that sailed from New York and landed 
at Coro, in western Venezuela. Expecting a popular uprising, he 
encountered instead hostility and resistance. Miranda returned to 
Britain, where in 1810 Bolivar persuaded him to return to Venezue- 
la at the head of a second insurrectionary effort. 



8 



Historical Setting 



Events in Europe were perhaps even more crucial to the move- 
ment for Latin American independence than Miranda's efforts. 
In 1808 French emperor Napoleon Bonaparte's troops invaded 
Spain amidst a family dispute in which the Spanish king Charles 
IV had been forced to abdicate the throne in favor of his son, Fer- 
dinand VII. The fearful Bourbon royal family soon became 
Napoleon's captives, and in 1810 the conquering French emperor 
granted his brother, Joseph, the Spanish throne, precipitating a 
four-year-long guerrilla war in Spain. 

These events had important repercussions in the Caracas cabil- 
do (city council). Composed of a criollo elite whose allegiance to 
the crown had already been stretched thin by the gross incompe- 
tence of Charles and his feud with his son, the cabildo refused to 
recognize the French usurper. Meeting as a cabildo abierto (town 
meeting) on April 19, 1810, the Caracas cabildo ousted Governor 
Vicente Emparan and, shortly thereafter, declared itself to be a 
junta governing in the name of the deposed Ferdinand VII. On 
July 5, 1811, a congress convoked by the junta declared Venezue- 
lan independence from Spain. Miranda assumed command of the 
army and leadership of the junta. 

A constitution, dated December 21, 1811, marked the official 
beginning of Venezuela's First Republic. Known commonly by 
Venezuelan historians as La Patria Boba, the Silly Republic, 
Venezuela's first experiment at independence suffered from myriad 
difficulties from the outset. The cabildos of three major cities — Coro, 
Maracaibo, and Guayana — preferring to be governed by Joseph 
Bonaparte rather than by the Caracas cabildo never accepted in- 
dependence from Spain. The First Republic's leadership, further- 
more, distrusted Miranda and deprived him of the powers necessary 
to govern effectively until it was too late. Most damaging, however, 
was the initial failure of the Caracas criollo elite insurgents to recog- 
nize the need for popular support for the cause of independence. 
Venezuela's popular masses, particularly the pardos, did not relish 
being governed by the white elite of Caracas and therefore remained 
loyal to the crown. Thus, a racially defined civil war underlay the 
early years of the long independence struggle in Venezuela. 

When a major earthquake in March 1812 devastated pro- 
independence strongholds while sparing virtually every locale com- 
manded by royalist forces, it seemed that the very forces of nature 
were conspiring against La Patria Boba. Despite the gravity of the 
circumstances, Miranda's July 25, 1812, surrender of his troops 
to the Spanish commander, General Domingo Monte verde, pro- 
voked a great deal of resentment among Bolivar and his other subor- 
dinates. Miranda died in a Spanish prison in 1816; Bolivar managed 



9 



Venezuela: A Country Study 

to escape to New Granada (present-day Colombia), where he as- 
sumed the leadership of Venezuela's independence struggle. 

Bolivar was born in 1783 into one of Caracas's most aristocrat- 
ic criollo families. Orphaned at age nine, he was educated in Eu- 
rope, where he became intrigued by the intellectual revolution called 
the Enlightenment and the political revolution in France. As a 
young man, Bolivar pledged himself to see a united Latin Ameri- 
ca, not simply his native Venezuela, liberated from Spanish rule. 
His brilliant career as a field general began in 1813 with the fa- 
mous cry of "war to the death" against Venezuela's Spanish rul- 
ers. The cry was followed by a lightning campaign through the 
Andes to capture Caracas. There he was proclaimed "The Liber- 
ator" and, following the establishment of the Second Republic, 
was given dictatorial powers. Once again, however, Bolivar over- 
looked the aspirations of common, nonwhite Venezuelans. The 
llaneros (plainsmen), who were excellent horsemen, fought under 
the leadership of the royalist caudillo, Jose Tomas Boves, for what 
they saw as social equality against a revolutionary army that 
represented the white, criollo elite. By September 1814, having won 
a series of victories, Boves' s troops forced Bolivar and his army 
out of Caracas, bringing an end to the Second Republic. 

After Ferdinand VII regained the Spanish throne in late 1814, 
he sent reinforcements to the American colonies that crushed most 
remaining pockets of resistance to royal control. Bolivar was forced 
to flee to Jamaica, where he issued an eloquent letter that estab- 
lished his intellectual leadership of the Spanish American indepen- 
dence movement. A number of local caudillos kept the movement 
alive in Venezuela. One, Jose Antonio Paez, a mestizo, was able 
to convince his fellow llaneros along the Rio Apure that Boves (who 
had been killed in battle in late 1814) had been mistaken: that the 
Spanish, not the criollo patriots, were the true enemies of social 
equality. The alliance of his fierce cavalrymen with Bolivar proved 
indispensable during the critical 1816-20 stage of the independence 
struggle. Another caudillo chief named Manuel Piar, after out- 
spokenly encouraging his black and pardo troops to assert their claims 
for social change, however, was promptly captured, tried, and ex- 
ecuted under Bolivar's direction. This ruthless disposition of Piar 
as an enemy of the cause of independence enhanced Bolivar's sta- 
ture and military leadership as the "maximum caudillo." 

Based near the mouth of the Rio Orinoco, Bolivar defeated the 
royalist forces in the east with the help of several thousand volun- 
teer European recruits, veterans of the Napoleonic Wars. Although 
Caracas remained in royalist hands, the 1819 Congress at Angostura 
(present-day Ciudad Bolivar) established the Third Republic and 



Simon Bolivar Palacios 
Courtesy Prints and Photographs 
Division, Library of Congress 



named Bolivar as its first president. Bolivar then quickly marched 
his troops across the llanos and into the Andes, where a surprise 
attack on the Spanish garrison at Boyaca, near Bogota, routed the 
royalist forces and liberated New Granada. Nearly two years later, 
in June 1821 , Bolivar's troops fought the decisive Battie of Carabobo 
that liberated Caracas from Spanish rule. In August delegates from 
Venezuela and Colombia met at the border town of Cucuta to for- 
mally sign the Constitution of the Republic of Gran Colombia (see 
Glossary), with its capital in Bogota. Bolivar was named president, 
and Francisco de Paula Santander, a Colombian, was named vice 
president. 

Bolivar, however, continued the fight for the liberation of Spanish 
America, leading his forces against the royalist troops remaining 
in Ecuador, Bolivia, and Peru. In the meantime, the Bolivarian 
dream of Gran Colombia was proving to be politically unwork- 
able. Bolivar's fellow Venezuelans became his enemies. King Ferdi- 
nand, after an 1820 revolt by liberals in Spain, had lost the political 
will to recover the rebellious American colonies. But the Venezue- 
lans themselves expressed resentment at being governed once again 
from far-off Bogota. 

Venezuelan nationalism, politically and economically centered 
in Caracas, had been an ever-increasing force for over a century. 
During the 1820s, Venezuelan nationalism was embodied in the 
figure of General Paez. Even the tremendous prestige of Bolivar 



11 



Venezuela: A Country Study 

could not overcome the historical reality of nationalism, and in 1829 
Paez led Venezuela in its separation from Gran Colombia. Paez 
ordered the ailing and friendless Bolivar into exile. Shortly before 
his death in December 1830, the liberator of northern South Ameri- 
ca likened his efforts at Latin American unity to having "plowed 
the sea." 

A Century of Caudillismo 

Two decades of warfare had cost the lives of between one-fourth 
and one-third of Venezuela's population, which by 1830 was esti- 
mated at about 800,000. Furthermore, the cocoa-based export econ- 
omy lay in ruins, a victim of physical destruction, neglect, and the 
disruption of trade. As a result, it was relatively simple for the young 
nation to shift its agricultural export activity to the production of 
coffee, a commodity whose price was booming in the North At- 
lantic nations with which Venezuela was now free to trade. The 
production of coffee for export would, along with subsistence 
agriculture, dominate Venezuela's economic life until the initia- 
tion of the petroleum boom well into the twentieth century. 
Venezuela's century-long postindependence era of caudillismo is 
perhaps best understood as a competition among various social and 
regional factions for the control of the Caracas-based bureaucracy 
that served the trade with the North Atlantic nations. 

The century of the caudillo started auspiciously, with sixteen rela- 
tively peaceful and prosperous years under the authority of General 
Paez. Twice elected president under the 1830 constitution, Paez, 
on the one hand, consolidated the young republic by putting down 
a number of armed challenges by regional chieftains. On the other 
hand, Paez usually respected the civil rights of his legitimate polit- 
ical opponents. Using funds earned during the coffee-induced eco- 
nomic boom, he oversaw the building of fledgling social and 
economic infrastructures. Generally considered second only to Boli- 
var as a national hero, Paez ruled in conjunction with the criollo 
elite, which maintained its unity around the mestizo caudillo as 
long as coffee prices remained high. 

In the 1840s, however, coffee prices plunged, and the elite divided 
into two factions: those who remained with Paez called themselves 
Conservatives, while his rivals called themselves Liberals. The 
Liberals first came to prominence in 1846 with Paez's surprising 
selection of General Jose Tadeo Monagas as his successor. Two 
years later, Monagas ousted all the Conservatives from his govern- 
ment and sent Paez into exile, precipitating a decade of dictatorial 
rule shared with his brother, Jose Gregorio. The abolition of slav- 
ery in 1854 was the only noteworthy act by the Monagas brothers. 



12 



Historical Setting 

In 1857 they introduced a new constitution in an obvious attempt 
to install a Monagas family dynasty. The regime was ousted the 
following year in a revolt that included elite members of both parties. 

The elite factions failed to agree on a replacement for Mona- 
gas, however, precipitating twelve years of intermittent civil war 
so chaotic that few history texts bother to chronicle the details. Be- 
tween 1858 and 1863, local caudillos engaged in a chaotic power 
struggle known as the Federal War because the Liberals favored 
federalism. In the end, the Liberals triumphed, and General Juan 
C. Falcon was named president. In practice, federalism was a dis- 
aster. Falcon's general lack of interest in ruling and his failure to 
exert strong leadership allowed local caudillos to exert oppressive 
authoritarian control over their fiefdoms even while they continued 
to pay lip service to the concept of federalism. Central government 
authority was finally restored in 1870 by Falcon's chief aide, An- 
tonio Guzman Blanco, who established a dictatorship that endured 
for eighteen years. 

Unlike his former boss, Guzman understood the politics of fed- 
eralism. After removing disloyal Conservative regional caudillos 
by force, he installed a loyal group of Liberal caudillos in their place. 
Thanks to a rapid expansion of both coffee production and for- 
eign loans, Guzman had access to considerable resources to main- 
tain his supporters with generous subventions, backed up, if 
necessary, by federal troops. This formula brought nearly two de- 
cades of much- welcomed peace to the Venezuelan countryside. 

Guzman used the increased revenue for additional activities that 
contributed to Venezuela's national development. Education ad- 
vanced notably, while the development of a modern governmen- 
tal bureaucracy and infrastructures for communications and 
transportation — roads, railroads, port facilities, and telegraph 
lines — provided vital support for expanding export agriculture. 
Caracas especially benefited from public works and grew into one 
of South America's premier cities. The vainglorious Guzman, who 
liked to be referred to as the "Illustrious American," dedicated 
as many of these projects to himself as possible. 

Although Guzman demanded honesty from his subordinates, he 
amassed a personal fortune that allowed him to live in the kingly 
luxury he felt he deserved, both in Caracas and in Paris during 
the intervals when he deemed it prudent to leave the presidency 
in the hands of a puppet. During one such period in 1888, civil 
unrest marked by anti-Guzman rioting by university students in 
Caracas convinced the "Illustrious American" to remain in Paris 
on a permanent basis. 



13 



Venezuela: A Country Study 

The four chaotic years that followed Guzman's rule were marked 
by several failed attempts to consolidate a civilian government. A 
colorless military regime, led by General Joaquin Crespo, spent 
most of its energies between 1892 and 1898 fighting to remain in 
power. Crespo was killed in 1898; in 1899 General Cipriano Cas- 
tro, the first of four military rulers from the Andean state of Tachira, 
marched on Caracas with a private army that became a strong na- 
tional army and assumed the vacant presidency. Castro was charac- 
terized as "a crazy brute" by United States secretary of state Elihu 
Root and as "probably the worst of [Venezuela's] many dictators" 
by historian Edwin Lieuwen. His nine years of despotic and dis- 
solute rule are best known for having provoked numerous foreign 
interventions, including blockades and bombardments by British, 
German, and Italian naval units seeking to enforce the claims of 
their citizens against Castro's government. The subsequent appear- 
ance of United States warships in 1902 convinced Castro to ac- 
quiesce to a financial settlement. Five years later, however, he again 
incited foreign naval intervention, this time by the Dutch, who 
seized a port and destroyed part of Venezuela's tiny navy. In 1908 
Castro traveled to Europe for medical treatment; his chief mili- 
tary aide and fellow tachirense (native of the state of Tachira), Juan 
Vicente Gomez, took this opportunity to overthrow the dictator 
and assume power. 

Gomez was the consummate Venezuelan caudillo. He retained 
absolute power from 1908 to 1935, alternating between the posts 
of president and minister of war. A series of puppet legislatures 
drafted and promulgated six new constitutions at the bidding of 
the dictator, while the judiciary enforced the will of the "Tyrant 
of the Andes" within the courts. 

The dictator's principal power base was the army. Dispropor- 
tionately staffed with tachirense personnel, the army was used to des- 
troy all of Gomez's regional foes. This "national" army was 
prudently provided with high salaries and generous benefits, the 
most modern weapons, and instruction from the Prussian-trained 
Chilean military. But Gomez's most important means of eliminating 
political foes was his ubiquitous secret police force. Although some 
opponents escaped with a simple reprimand, many thousands of 
others, those who did not manage to escape into exile, were locked 
up — rarely with the benefit of a trial — in prisons where death by 
starvation or at the hands of torturers was commonplace. 

Gomez justified his harsh dictatorship as the form of govern- 
ment preferred by the primitive, mixed-race Venezuelans. He based 
his theories in part on the racist notions of the book Democratic 
Caesarism by Gomez supporter Laureano Vallenilla Lanz that became 



14 



Juan Vicente Gomez 
Courtesy Prints and Photographs 
Division, Library of Congress 




official regime doctrine. In accord with these theories, Gomez be- 
lieved that national development could be undertaken successfully 
only by foreigners who enjoyed technological superiority to Vene- 
zuelans. Moreover, the climate of stability required for this exter- 
nally directed development process could only be provided — 
according to Gomez's doctrine — by strong authoritarian rule. 

The Gomez regime coincided with a protracted period favora- 
ble to Venezuelan exports. Coffee exports boomed, both in volume 
and price, during the early years of his rule. Most important, 
however, the foreign exploitation of Venezuela's petroleum reserves 
began in 1918, augmenting government revenues to a degree previ- 
ously unknown and allowing Gomez to pay off the nation's entire 
foreign debt and to institute a public works program. The begin- 
nings of an urban middle class were also evident in the bureaucra- 
cy that grew up around the nascent Venezuelan oil industry. The 
provision of required local services to the oil industry further ex- 
panded this new middle class. 

The true beneficiaries of the petroleum boom, however, were 
Gomez, the army, and the dictator's associates from Tachira. For 
the vast majority of Venezuelans, the petroleum era brought 
reduced employment (oil being a capital-intensive industry) and 
high food prices stemming from a decline in domestic agricultural 
activity and an increase in imports. Inflation increased, and real 
wages declined. Little improvement took place in public education 



15 



Venezuela: A Country Study 



and health care, and although the capital-intensive petroleum in- 
dustry grew impressively, oil-derived revenue was not applied to 
labor-intensive efforts such as agricultural diversification or the pro- 
motion of small-scale industry. 

Subsequent events recast the students at the Central University 
of Venezuela, in Caracas, into the most significant opposition to 
the Gomez regime. Having closely observed the Mexican Revolu- 
tion of 1910 and the Russian Revolution of 1917, the students 
launched a struggle in 1928 to liberate Venezuela from Gomez's 
grip. The revolt began in February, when Jovito Villalba and two 
other students were arrested for making antigovernment speeches. 
In protest, other students then challenged the dictator to jail them 
as well, and Gomez complied by arresting 200 student activists. 
A popular demonstration followed. Police dispersed the demon- 
strators with firearms, killing and wounding many participants. 
With the assistance of a few young military officers, the rebels then 
stormed the presidential palace, which they managed to occupy 
briefly before being overwhelmed by Gomez's troops. Gomez then 
closed the university and rounded up the students, many of whom 
ended up laboring on road gangs. Some of the movement's leader- 
ship languished or died in prison; those of the Generation of 1928 
who managed to escape into exile, like Romulo Betancourt, Rafael 
Caldera Rodriguez, and Raul Leoni, were later to become the na- 
tion's principal political leaders. 

Two subsequent efforts to overthrow Gomez — executed by long- 
exiled caudillo rivals who believed that their landings on the 
Venezuelan coast would trigger popular insurrections — ended in 
failure. The "Tyrant of the Andes" ruled until his death, by natural 
causes, in December 1935 at age seventy-nine. The event precipi- 
tated widespread looting, property destruction, and the slaughter 
of Gomez family members and collaborators by angry mobs in 
Caracas and Maracaibo. Gomez's twenty-seven years in power 
brought to a close Venezuela's century of caudillismo; and, accord- 
ing to many historical accounts, his demise marked the beginning 
of Venezuela's modern period. 

Although he was not the last of Venezuela's dictators, analysts 
of contemporary Venezuelan society commonly cite Gomez's 
lengthy rule as the true line of demarcation between Venezuela's 
democratic present and its authoritarian past. Although the na- 
tion's post- 1958 democratic leaders received their political baptism 
of fire in Venezuela in 1928, their principal political, social, and 
economic perceptions were formed in exile in Europe, Mexico, or 
the United States. During the transition years from 1935 to 1958, 
the outlines of a national democratic political culture, including 



16 



Historical Setting 



the configuration of Venezuela's modern political party system, 
at last began to take shape. 

The Transition to Democratic Rule 

During the twenty-three years of transition to democratic rule, 
institutions developed as the military transferred political power 
to civilians. However, the military was still very dominant, and 
the death of Gomez left a leadership vacuum that could be filled 
only by the old dictator's tachirense minister of war, General Elea- 
zar Lopez Contreras. After he finished Gomez's term of office in 
1936, the Congress, all the members of which had been appointed 
by Gomez, selected Lopez to serve his own five-year term in office. 

When the riots following Gomez's death precipitated demands 
for liberalizing the dictatorship, Lopez quickly realized that his sur- 
vival depended on his allowing some civilian political expression. 
Accordingly, he freed long-time political prisoners and dismantled 
the worst part of Gomez's repressive apparatus. Exiles returned 
to establish the first mass political organizations in the nation's 
history, the most important of which was the Venezuelan Organi- 
zation (Organizacion Venezolana — Orve) led by the populist Be- 
tancourt. Another surviving leader of the Generation of 1928, Jovito 
Villalba, revived the Marxist-oriented Venezuelan Student Fed- 
eration (Federacion Estudiantil de Venezuela — FEV); the Venezue- 
lan Communist Party (Partido Comunista Venezolano — PCV) was 
also reorganized, although it remained banned from political ac- 
tivities in the revised constitution of 1936. In a related area, liber- 
alized labor legislation encouraged the organization of the nation's 
first modern labor syndicates. 

A highly effective general strike in June 1936, however, led the 
Lopez regime to the conclusion that the proper boundaries of re- 
form had been crossed. Accordingly, the Lopez government re- 
jected a November application by Orve and other leftist opposition 
elements for legal recognition of a united National Democratic Party 
(Partido Democratico Nacional — PDN) and brutally suppressed 
a strike by oil workers the following month. The regime justified 
the outlawing of the nascent labor unions in 1937 by claiming that 
they had engaged in illegal political activities. Soon thereafter, the 
regime proscribed virtually all organized political opposition. 

Lopez decided instead to concentrate his reform efforts in the 
relatively noncontroversial sphere of economic modernization. The 
government established a central bank, along with state-controlled 
industrial and agricultural development banks, opened new oil fields 
to exploitation, and, employing the slogan of sembrar elpetroleo ("sow- 
ing the oil"), launched a program for developing the national 



17 



Venezuela: A Country Study 

economic and social infrastructure, although at a lackluster pace 
that led critics to question the program's efficacy. 

In 1941 Lopez's Congress selected yet another tachirense, Minister 
of War Isaias Medina Angarita, to replace Lopez. In this respect, 
it appeared to be politics as usual. A more ambitious economic de- 
velopment plan, announced by Medina in 1942, was interrupted 
during World War II when German submarines played havoc with 
tankers transporting Venezuela's oil. New laws governing the state's 
relationship with foreign oil companies in 1943 resulted in substan- 
tially increased revenues, spurring renewed development efforts 
in 1944. Construction activity boomed during the waning years 
of the war, a period that also saw the passage of Venezuela's first 
income tax and social security laws. 

Perhaps more consequential, however, was Medina's expansion 
of the political opening begun by Lopez. The PDN was legalized 
and promptly changed its name to Democratic Action (Accion 
Democratica — AD). Its members soon constituted a vociferous 
minority in local governments and, after the January 1943 elec- 
tions, in the lower house of Congress known as the Chamber of 
Deputies (the upper house was the Senate) . The president responded 
by organizing his own political party, the Venezuelan Democratic 
Party (Partido Democratico Venezolano — PDV), which waged a 
vigorous campaign and gained a legitimate victory in the crucial 
1944 congressional elections. With his party thus assured of con- 
trol of the 1945 Congress, which would hold indirect elections for 
president, Medina appeared poised to designate his successor. 

To the surprise of many, he chose Diogenes Escalante, a liberal 
civilian serving as ambassador in Washington. A delighted AD 
agreed to support Escalante 's candidacy. Medina's opposition on 
the right, however, which had expected former President Lopez 
to receive the nomination, was incensed by the choice. Fear was 
in the air during the summer of 1945, as rumors circulated that 
the forty- six-year-long rule by tachirenses was about to be ruptured 
by a civil war between the lopecistas and medinistas (followers of Lo- 
pez and Medina). Escalante soon became too ill to pursue the 
presidency, however, and his announced replacement was a color- 
less figure widely regarded as a puppet of Medina. Ironically, it 
was not the lopecista right that brought the era of tachirense rule to 
a close. Instead, on October 18, 1945, the AD, in conjunction with 
junior military officers, suddenly overthrew Medina. 

The conspiracy to overthrow Medina had been hatched inside 
the Patriotic Military Union (Union Patriotica Militar — UPM), 
a secret lodge of junior officers who were disgruntled over the per- 
sistence of cronyism and the lack of professionalism within the 



18 



Venezuelan oil worker, ca. 1942 
Courtesy Prints and Photographs Division, Library of Congress 

tachirense senior ranks. These officers had invited AD to join their 
plot in June and asked Betancourt to serve as the president of the 
new government. AD did not agree to cooperate with the UPM, 
however, until after the October 1 announcement of Medina's 
replacement for Escalante. 

After the coup, Betancourt named a seven-man governing jun- 
ta consisting of four adecos (members of AD), two military officers, 
and one independent. AD thus controlled the government, and the 
UPM controlled the military. All officers who had attained ranks 
above major before the 1945 rebellions — Carlos Delgado Chalbaud, 
Julio Vargas, and Marcos Perez Jimenez — were hence promptly 
sent into retirement. Political reform was the first item on the jun- 
ta's agenda, and in March 1946, it decreed a sweeping new elec- 
toral law. Universal suffrage for all citizens over eighteen, including 
women, at last became law. All political parties were legalized, and 
the number of congressional seats was to be apportioned accord- 
ing to each party's percentage of the total vote. 

AD's principal competitor in the October 1946 Constituent 
Assembly elections, held to elect a body that would draft a new 
constitution, was the Social Christian Party (Comite de Organ- 
izacion Politica Electoral Independiente — COPEI), recently 
founded by Rafael Caldera Rodriguez. COPEI appealed mainly 



19 



Venezuela: A Country Study 

to conservative Roman Catholics. Other parties of less conserva- 
tive leanings but narrower electoral appeal included the Democratic 
Republican Union (Union Republicana Democratica — URD), a per- 
sonal vehicle for Villalba, and the communists, whose various fac- 
tions united in 1947 under the banner of the PCV, which had been 
legalized in 1 942 . Although competition among the parties was in- 
tense, AD won overwhelming majorities in the Constituent Assembly 
elections as well as in the presidential and congressional elections 
of December 1947 and the municipal elections of May 1948. 

AD's wide margin of victory (in 1946 it drew 79 percent of the 
vote; in 1947, 73 percent) led its leaders to believe that they could 
push through a highly progressive program without considering the 
conservative political opposition. A new constitution was promul- 
gated in 1947. The party's vigorous pursuit of " social justice and 
better conditions for the workers" (as stated in a decree by the 1945 
junta that established a separate Ministry of Labor) engendered 
widespread hostility within the business community, both foreign 
and local. The overhaul of the 1943 petroleum law to assure the 
government a 50 percent tax on the oil industry's profits intensified 
the foreign oil companies' antagonism. The junta's aggressive cam- 
paign to expand public education and its regulation of both public 
and private education incensed the Roman Catholic Church. The 
church, whose dominant role in education had heretofore gone un- 
challenged, now enlisted COPEI in a strident antigovernment 
campaign. 

The political polarization intensified following the inauguration 
of Romulo Gallegos as president on February 15, 1948. At that time, 
Venezuela's most renowned author, Gallegos proved less than adroit 
as a politician. His signing of AD's wide-ranging land reform bill 
in October pitted the nation's powerful landowners against him, and 
his reduction of the military personnel in his cabinet and advocacy 
of a reduced military budget alienated the armed forces. In mid- 
November, the UPM issued an ultimatum to the president de- 
manding that COPEI share political authority with AD and that 
Betancourt, still AD leader, be sent into exile. Gallegos refused, and 
on November 24, after barely ten months in office, the military over- 
threw him in a nearly bloodless coup and exiled him along with Be- 
tancourt and the rest of the AD leadership. 

The three-man provisional military junta that assumed control 
of the government was headed by Colonel Delgado. Delgado had 
joined the anti-AD conspiracy only after Gallegos had rejected the 
UPM ultimatum and it was clear that his fall was inevitable. Delgado 
had been a UPM coconspirator in 1945, and had served as a mem- 
ber of the AD junta and as minister of defense under Gallegos. 



20 



Historical Setting 



The military junta's other two members, UPM conspirator Perez 
Jimenez and Luis Felipe Llovera Paez, were tachirenses who also 
held the rank of colonel. The junta quickly set about undoing the 
reforms of the AD trienio (see Glossary). It voided the 1947 consti- 
tution and restored the traditionalist 1936 constitution. The new 
military government outlawed AD and persecuted its militants. 

Delgado took a more moderate position than his fellow junta 
members on such issues as the persecution of AD and the poten- 
tial transition from a military to a civilian government. His dis- 
agreements with Perez and Llovera, who advocated overt military 
rule in the Venezuelan tradition, became increasingly public. In 
November 1950, Delgado was assassinated. German Suarez 
Flanerich served as a figurehead for Perez, who assumed leader- 
ship of the junta. Under pressure from non-AD political parties, 
the junta reluctantly convoked long-deferred presidential elections 
for November 1952. 

AD continued to be proscribed but was extremely active under- 
ground. Perez organized a progovernment party, the Independent 
Electoral Front (Frente Electoral Independiente — FEI), which he 
mistakenly believed would be victorious and thus legitimize his rule. 
Caldera ran a conservative campaign as the presidential candidate 
of COPEI, and the URD's Villalba ran a fiery anti government 
campaign. When the early election results made it clear that the 
URD (supported clandestinely by AD) was far ahead of the govern- 
ment party, Perez ordered the count halted and declared himself 
president. The other junta members were sent abroad "on vaca- 
tion," and the leaders of the URD and COPEI joined their AD 
colleagues in exile. 

The next five years saw a brutal dictatorship in a country that 
by now was notorious as the almost archetypical home of Latin 
American dictators. A regressive new constitution reverted to in- 
direct elections for president by a puppet legislature. Pedro Estrada, 
described by historian Hubert Herring as "as vicious a man hun- 
ter as Hitler ever employed," headed the vast National Security 
Police (Seguridad Nacional — SN) network that rounded up any 
opposition, including military officers, unable to escape. Hundreds, 
if not thousands, were brutally tortured or simply murdered at the 
notorious Guasina Island concentration camp in the Orinoco jun- 
gle region. Labor unions were harassed, and the Venezuelan Con- 
federation of Labor was abolished and replaced by a confederation 
under the control of the FEI. When the Central University of 
Venezuela became a center of opposition to the regime, it was sim- 
ply shut down. Strict controls over the press recalled the worst days 
of the Gomez regime. Political power concentrated around Perez 



21 



Venezuela: A Country Study 

and an inner circle of six tachirense colonels who held key cabinet 
positions. Perez revived Gomez's old "Democratic Caesarism" doc- 
trine and gave it a new name, the "New National Ideal," under 
which politics would be deemphasized in favor of material progress 
(dubbed the "conquest of the physical environment" by apologists 
for the dictatorship). 

Under Perez, much of the nation's ever-increasing petroleum 
revenues were used for ostentatious construction projects. These 
included a replica of New York's Rockefeller Center, a luxurious 
mountaintop hotel, and the world's most expensive officers' club, 
all of which served more as monuments to the dictator than as con- 
tributions to national development. An even larger share of the 
state treasury, fully 50 percent according to one estimate, was 
squandered or simply stolen. By the time Perez was forced to flee 
to Miami, he alone had accumulated a fortune estimated at US$250 
million. Meanwhile, government expenditures on such human 
resources as health and education stagnated. 

Perez's staunch anticommunism and his more liberal policies 
toward the foreign oil companies — compared with the nationalis- 
tic stance of AD — won him the open support of the United States 
government; President Dwight D. Eisenhower awarded him the 
Legion of Merit in 1954. His seemingly insatiable greed for wealth 
and power, however, as well as the widespread reports of his de- 
bauchery, made him a growing object of scorn among his coun- 
trymen. In mid- 195 7 the united civilian opposition organized an 
underground movement called the Patriotic Junta dedicated to over- 
throwing the dictatorship. Opposition to Perez also flourished 
within the military, especially among junior officers tired of the 
corruption and monopoly on power of the ruling generals. Perez's 
favoritism to the army alienated air force and naval officers. 

A shameless electoral farce in 1957, obvious to all as a bald 
maneuver designed to perpetuate Perez in power, proved decisive 
in the downfall of the dictator. Fearful of an embarrassment simi- 
lar to that of 1952, Perez cancelled planned elections and then sched- 
uled a plebescite. Only two hours after the polls had closed on 
December 15, the government announced an incredible 85 per- 
cent vote in favor of Perez continuing in office. Outrage at this 
obviously fraudulent result was universal among both the civilian 
and military opposition. 

Air force planes dropped bombs on the capital on January 1 , 
1958, to signal the start of a military insurrection. The anticipat- 
ed coup d'etat failed to materialize, however, because of the lack 
of coordination among the conspirators. Nonetheless, the bomb- 
ing did give heart to the civilian opposition to Perez by signaling 



22 



Historical Setting 



that they were not without allies within the military. On January 
10, the Patriotic Junta convoked a massive demonstration of civilian 
opposition in downtown Caracas; on the twenty-first, it called for 
a general strike that proved immediately effective. Street demon- 
strations as well as fighting erupted and quickly spread outside Cara- 
cas. When the navy revolted on January 22, a group of army 
officers, fearful for their own lives, forced Perez to resign. The fol- 
lowing day, Venezuela's last dictator fled the country, carrying most 
of what remained of the national treasury. In addition, his ouster 
cost the nation some 300 dead and more than 1,000 wounded. 

The five-man provisional military junta at first tried to rule 
without civilian participation. The Patriotic Junta, however, called 
for the rebellion to continue until civilians were included. Two 
businessmen were promptly added to the junta, which ruled dur- 
ing the year that was required to dismande the institutions associated 
with the dictatorship and transfer power to a popularly elected 
civilian government. The junta contained personnel from all three 
military services; it was led by Admiral Wolfgang Larrazabal, who 
headed the crucial January 22 naval rebellion. 

The junta also began a valiant effort to deal with the grim reali- 
ties of an empty treasury and some US$500 million in foreign debt. 
It immediately stopped work on most of the dictator's public works 
projects and later decreed a sharp increase in income taxes. Most 
important, the junta increased the government's share of the profits 
on petroleum extraction from 50 percent to 60 percent. 

Under a new electoral law decreed in May, the junta convoked 
elections for December 1958. The political parties that had partic- 
ipated in the Patriotic Junta found themselves unable to reach a 
consensus on a single candidate. In the Pact of Punto Fijo, drawn 
up in October, the top party leaders did agree to resume their 
cooperation after the elections. They drew up a common policy 
agenda and agreed to divide cabinet posts and other governmen- 
tal positions among the three major parties, regardless of whose 
candidate proved victorious in December. AD then nominated Be- 
tancourt, the URD tapped the popular Larrazabal as its candidate, 
and COPEI again ran Caldera as its candidate. After a hard-fought 
campaign, Betancourt came out the victor with 49 percent of the 
total; Larrazabal, who also had the support of the communists, 
received 35 percent; Caldera garnered 16 percent. AD also gained 
a majority in both congressional bodies. Although few anticipated 
it at the time, Betancourt 's inauguration as president on Febru- 
ary 13, 1959, initiated a period of democratic, civilian rule of un- 
precedented length in the nation's history. 



23 



Venezuela: A Country Study 

The Triumph of Democracy 

Historians invariably point to Betancourt's inauguration as the 
pivotal point in four centuries of Venezuelan history. Not since 
its discovery by Spanish explorers in the late fifteenth century had 
an event so clearly marked a new era for the country. After nearly 
a century and a half as perhaps the most extreme example of Latin 
America's postindependence affliction of caudillismo and military 
rule, Venezuela's political life after 1959 was defined by uninter- 
rupted civilian constitutional rule. 

This stark break with the past has been attributed most often 
to the government's petroleum-based wealth, which gave it the 
material resources to win a vast portion of the population over to 
the democratic consensus, and to the spirit of cooperation among 
the nation's various political entities (commonly known as the 
"Spirit of the 23rd of January," after the date of Perez's fall from 
power) as embodied in the Pact of Punto Fijo. Betancourt and his 
AD colleagues had apparently learned from the disastrous conse- 
quences of their strident posture during their previous stint at 
governing. They now reversed themselves by granting concessions 
to a broad range of political forces that included many of their most 
bitter enemies during the trienio. They guaranteed, for example, 
the continuation of obligatory military service; improved salaries, 
housing, and equipment for the military; and, most important, 
granted amnesty from prosecution for crimes committed during 
the dictatorship. The Roman Catholic Church, whose active op- 
position to Perez had impressed many doctrinally anticlerical AD 
militants, somewhat enhanced its political image and expanded its 
influence within the government. 

In another pact, the "Declaration of Principles and Governing 
Program," which was written up during the weeks before the 1958 
elections, AD, COPEI, and the URD agreed on a broad range 
of matters with respect to the economy. In what amounted to 
guarantees to the foreign and local business communities, the parties 
agreed to respect the principles of capital accumulation and the 
sanctity of private property. Local industry, furthermore, was 
guaranteed government measures to protect it from foreign competi- 
tion as well as subsidies through the state-run Venezuelan Develop- 
ment Corporation (Corporation Venezolana de Fomento — CVF). 
With respect to agrarian properties, any expropriation or transfer 
of title would provide for compensation to the original owner. 

Betancourt made other conciliatory moves as well. A new labor 
code granted unprecedented government guarantees of the right to 
association and collective bargaining. Vastly enlarged state subsidies 



24 




Former president Romulo Betancourt 
Courtesy Prints and Photographs Division, Library of Congress 



benefited the poor in such areas as food, housing, and health care. 
The objective was to institutionalize a * 'prolonged political truce" 
by including as many citizens as possible within a popular consen- 
sus in favor of the civilian, democratic project. The " Spirit of the 
23rd of January" informed the 1961 constitution, which guaran- 
teed a wide range of civil liberties and created a weak bicameral 
legislature where partisan political conflict could be aired but would 
cause a minimum of damage. The president was given considera- 
ble power, although he was allowed to run for reelection only after 
sitting out two five-year terms. 

The major group excluded from the political pacts of 1958 was 
the extreme left. This exclusion was the result, initially, of the doc- 
trinal anticommunism of AD — and of Betancourt in particular. The 
exclusion was subsequently perpetuated by the triumph of the 
Cuban Revolution in 1959 and the revolution's precipitous radicali- 
zation during the early 1960s. The Cuban Revolution had a pro- 
found impact on the Venezuelan left, particularly among student 
groups, who saw it as a model for a successful revolutionary effort 
in Venezuela. In November 1960, the URD dropped out of the 
governing coalition with AD in protest over Betancourt' s firm stance 
against Cuban leader Fidel Castro Ruz. AD also suffered the loss 
of most of its student wing, which in April of that year split from 



25 



Venezuela: A Country Study 

the party to form the Movement of the Revolutionary Left (Movi- 
miento de la Izquierda Revolucionaria — MIR), supposedly to pro- 
test delays in the implementation of the government's agrarian 
reform program. 

In 1961 these groups, together with the PCV, consolidated their 
advocacy of antigovernment guerrilla warfare. The Betancourt 
government supported Cuba's expulsion from the Organization 
of American States (OAS), then broke diplomatic relations with 
the Castro government in December. In May and June of the fol- 
lowing year, military officers sympathetic to the left instigated two 
bloody uprisings, first at Carupano on the Peninsula de Paria, then 
at Puerto Cabello. The uprisings provoked Betancourt into legal- 
ly proscribing the PCV and the MIR, which promptiy went un- 
derground and formed the Armed Forces of National Liberation 
(Fuerzas Armadas de Liberation Nacional — FALN). The FALN 
engaged in rural and urban guerrilla activities throughout the re- 
mainder of the 1960s. The activity reached its height in 1962 and 
1963, when the FALN sabotaged oil pipelines and bombed a Sears 
Roebuck warehouse and the United States Embassy in Caracas. 

The FALN failed, however, to attract adherents among the poor, 
whether rural campesinos or the residents of the makeshift shacks, 
known as ranchos (see Glossary), that made up Caracas 's mushroom- 
ing slum areas. The guerrillas also proved unable to achieve their 
secondary goal of provoking a coup d'etat that would lead to a 
repressive military regime and, hence, increase popular support 
for the insurgents. As political scientist Daniel H. Levine points 
out, the FALN's effect proved to be quite the contrary of what it 
intended: it actually consolidated the democratic regime by mak- 
ing AD look — to its many former enemies on the right — like the 
better of two alternatives. At the same time, the insurgency provided 
a vital military mission to the armed forces, one that removed them 
still further from direct participation in politics. Ultimately, the 
FALN's efforts to disrupt the December 1963 elections also proved 
futile. In the midst of this guerrilla campaign, the government 
arrested all PCV and MIR congressmen in September, and in 
November military forces discovered a three-ton cache of small 
arms — with clear links back to the Castro regime — on a deserted 
stretch of beach. 

Castro was not Betancourt 's only enemy in the Caribbean, 
however. Rafael Leonidas Trujillo Molina, the dictatorial ruler of 
the Dominican Republic, was implicated in a number of antigovern- 
ment conspiracies uncovered within the Venezuelan military, as 
well as in the bombing of Betancourt 's car in June 1960, in which 
a military aide was killed and the president badly burned. The 



26 



Historical Setting 



Venezuelan president's strong-willed antipathy for nondemocratic 
rule was reflected in the so-called Betancourt Doctrine, which de- 
nied Venezuelan diplomatic recognition to any regime, right or 
left, that came to power by military force. 

Highly unfavorable circumstances in the external sector of the 
economy handicapped the Betancourt administration. Having in- 
herited an empty treasury and enormous unpaid foreign debts from 
the spendthrift Perez, Betancourt nevertheless managed to return 
the state to fiscal solvency despite the persistence of rock-bottom 
petroleum prices throughout his presidency. He also managed to 
continue the effort, begun during the 1930s by President Lopez, 
of "sowing the oil" by initiating a variety of reform programs, 
the most important of which was agrarian reform. Aimed not at 
addressing social grievances but rather at reversing Venezuela's 
protracted decline in agricultural production, AD's land reform 
distributed only unproductive private properties and public lands. 
Landowners who had their properties confiscated received gener- 
ous compensation. By the end of the 1960s, an estimated 166,000 
heads of household had received provisional titles to their new 
properties. 

During 1960 two institutions were founded that made impor- 
tant contributions toward the development of a national petroleum 
policy: the Venezuelan Petroleum Corporation (Corporacion 
Venezolana de Petroleos — CVP), conceived to oversee the national 
petroleum industry, and the Organization of the Petroleum Ex- 
porting Countries (OPEC), the international oil cartel that Vene- 
zuela established in partnership with Kuwait, Saudi Arabia, Iraq, 
and Iran. Both organizations were the creations of Juan Pablo Perez 
Alfonso, who, for the second time, served as Betancourt 's minister 
of energy. During the trienio, Perez Alfonso had earned the wrath 
of the foreign oil firms with his proposition that the state should 
gradually assume control of the petroleum industry; this idea now 
once again became government policy. 

Perhaps the greatest of all Betancourt's accomplishments, however, 
was the successful 1963 election. Despite myriad threats to disrupt 
the process, nearly 90 percent of the electorate participated on 
December 1 in what was probably the most honest election in 
Venezuela to that date. AD standard-bearer Raul Leoni proved 
victorious, gaining 33 percent of the total vote in a field of seven 
presidential candidates. On March 11, 1964, for the first time in 
the nation's history, the presidential sash passed from one constitu- 
tionally elected chief executive to another. It was a day of immense 
pride for the people of Venezuela. 



27 



Venezuela: A Country Study 

Leoni, a hard-working but less colorful figure than Betancourt, 
differed little from his reformist predecessor from an ideological 
standpoint. Nevertheless, unlike Betancourt, Leoni proved un- 
able to agree to COPEI's conditions for forming a governing coa- 
lition and instead made an alliance with the URD and the National 
Democratic Front (Frente Nacional Democratica — FND), a pro- 
business party created around Arturo Uslar Pietri, a noted writer 
and public affairs activist. 

Subversive activities quieted considerably during the Leoni ad- 
ministration. By no means were they ended, however. Rumors of 
military plots were rife throughout the five-year term; the most 
dangerous military rebellion, an attempted coup d'etat in October 
1966, was swiftly put down and its leaders court-martialed. The 
threat from the revolutionary left also persisted, leading Leoni in 
December 1966 to order an army search of Caracas 's Central 
University for revolutionaries. By 1965, however, the PCV had 
begun to harbor doubts about violence as a road to power, and 
over the course of the following two years, it gradually abandoned 
the revolutionary path. Splinter groups with Cuban ties persisted 
in their violent activities, however, and in May 1967, a small land- 
ing party headed by a Cuban army officer was captured at 
Machurucuto in the state of Miranda. This incursion would prove 
to be the pinnacle of Castro's crusade to export his revolution to 
Venezuela. Insurgent activity subsequently subsided, and bilateral 
relations with Cuba eventually improved. 

Economic growth averaged a healthy 5.5 percent annually dur- 
ing the Leoni years, aided by a recovery in petroleum prices and 
the relative political tranquility as the AD program attained 
legitimacy. Leoni kept the Betancourt reform programs on course 
and also introduced a number of impressive infrastructure projects 
designed to open up the nation's interior to agricultural and in- 
dustrial development. Regional integration efforts advanced, al- 
beit slowly, although Venezuela remained outside the newly created 
Andean Common Market (Ancom; see Glossary) in response to 
objections from the local business community, which feared com- 
petition from lower-priced goods manufactured in neighboring 
countries. 

The governing party split in 1967 over the choice of the party's 
presidential candidate for the 1968 elections. Stemming in part from 
a long-simmering rivalry between former president Betancourt and 
AD secretary general Jesus Angel Paz Galarraga, a highly damaging 
split led Paz to launch the People's Electoral Movement (Movi- 
miento Electoral del Pueblo— MEP). The MEP tendered Luis B. 
Prieto as its candidate, and Gonzalo Barrios headed the AD ticket. 



28 



Historical Setting 



The URD joined forces with the FND and the party of former 
presidential candidate Larrazabal to promote the candidacy of 
Miguel Angel Burelli Rivas under the banner of a coalition dubbed 
the Victorious Front. COPEI once again ran Caldera, who proved 
victorious in this fourth attempt to capture the presidency. His vic- 
tory resulted both from the split in AD and from COPEI' s liber- 
alization of its image away from that of a strictly conservative 
Roman Catholic party. All four candidates finished strongly at the 
end of a hard-fought campaign, however, and Caldera eked out 
a victory over Barrios by a margin of merely 31,000 votes. The 
passing of the presidential sash from Leoni to AD's principal op- 
position leader in March 1969 marked yet another first in Venezue- 
la's rapidly maturing democracy. 

President Caldera never made an earnest effort to form a govern- 
ing coalition. Throughout his five-year term, his cabinet consisted 
exclusively of copeyanos (COPEI party members) and independents. 
In Congress, however, the governing party was forced to form a 
working alliance with AD in 1970 because mounting student 
demonstrations and growing partisan intransigence made unilateral 
rule impossible. 

The major concerns of Caldera 's government were not unlike 
those of his two predecessors: agrarian reform and increased farm 
production, the improvement of educational and social welfare 
benefits, the expansion and diversification of industrial develop- 
ment, and progress toward local control of the petroleum indus- 
try. With respect to the latter, the government's tax rate on the 
petroleum companies rose to 70 percent by 1971 . In the same year, 
the Hydrocarbons Reversion Law — stipulating that all of the oil 
companies' Venezuelan assets would revert to the state when their 
concessions expired — went into effect. 

The key policy distinction between Caldera' s government and 
those of his AD predecessors lay in the area of foreign policy. Presi- 
dent Caldera rejected the Betancourt Doctrine, which he considered 
restrictive and divisive, and which he thought had served to iso- 
late Venezuela in the world. Bilateral relations were soon restored 
with the Soviet Union and the socialist nations of Eastern Europe, 
as well as with a number of South American nations that had fallen 
under military rule. By dividing Latin American nations from one 
another, the Betancourt Doctrine, Caldera believed, had served 
to promote United States hegemony in the region. Seeking points 
of unity instead, Caldera established "pluralistic solidarity" as the 
guiding principle of Venezuelan foreign policy. Among its posi- 
tive results was Venezuela's entrance into Ancom upon signing 
the 1973 Consensus of Lima; Ancom had assuaged the fears of the 



29 



Venezuela: A Country Study 

business community by allowing Venezuela to attach a number 
of special conditions to its membership. 

On the one hand, by joining Ancom, Venezuela emphasized its 
Andean identity. On the other hand, the striking expansion of its 
investment in the Caribbean Development Bank emphasized the 
nation's Caribbean character. Caldera thus began to provide oil- 
based financial aid to the nations of Central America and the Carib- 
bean, an effort that would be greatiy expanded in subsequent years. 

Although the internal security situation had improved, Caldera 
adopted a policy of "pacification" toward the remaining armed 
opposition. The pacification program legalized the PCV and other 
leftist parties and granted amnesty to revolutionary activists. The 
government credited the program for the dramatic decline in guer- 
rilla activity. Its opponents, however, pointed out that the most 
conspicuous decrease in Venezuela's revolutionary violence came 
under Leoni, when Cuba and the Soviet Union changed their poli- 
cies in the wake of the 1967 death of Ernesto "Che" Guevara in 
Bolivia and the 1968 Soviet invasion of Czechoslovakia. 

The December 1973 election was a truly pluralistic affair. The 
twelve presidential candidates ranged from three aspirants of the 
parties on the left to an even larger number of self-declared represen- 
tatives of former president Perez on the right. The MEP, which 
had moved steadily leftward since 1968, allied itself with the PCV 
and nominated Paz under the banner of Popular Unity (Unidad 
Popular), modeled after the Chilean left-wing coalition of the same 
name that had elected Salvador Allende Gossens in 1970. The URD 
initially joined the coalition, but the aging Jovito Villalba later with- 
drew his party to launch his own candidacy. The other candidate 
on the left was Jose Vicente Rangel of the Movement Toward So- 
cialism (Movimiento al Socialismo — MAS), a party that had been 
founded in 1971 by a group of PCV dissidents with liberal, "Eu- 
rocommunist" notions of a modern, election-oriented party. Un- 
like the Moscow-line PCV, the MAS had little bond to the Soviet 
Union. 

Although the 1973 election was notable for the ideological plural- 
ism represented in the competing political parties, its most impor- 
tant distinction was the primacy achieved by the two principal 
parties, AD and COPEI. In contrast to 1968, AD converged around 
the figure of Betancourt's long-time protege and minister of in- 
terior, Carlos Andres Perez, thus passing party leadership to its 
second generation. Campaigning deep into the rural Venezuelan 
heartland as well as in the ranchos of all major cities, Perez managed 
to recapture much of the populist appeal acquired by Betancourt 
thirty years previously. The campaign of his opponent, Lorenzo 



30 



Historical Setting 



Fernandez (also a former minister of interior) was, by compari- 
son, a low-key affair. 

On election day, an astounding 97 percent of the registered voters 
went to the polls. Perez, with 48.8 percent of the valid vote, pre- 
vailed against Fernandez's 36.7 percent. Between them, then, AD 
and COPEI captured nearly 86 percent of the valid presidential 
vote; the two parties also garnered 43 of the 49 Senate seats and 
166 of 200 seats in the Chamber of Deputies. AD attained abso- 
lute majorities in both congressional houses as well as in 157 of 
the nation's 181 municipal councils. The showing of leftist par- 
ties, in contrast, was unimpressive: the Popular Unity coalition 
gained 5.1 percent; MAS, 4.2 percent; and the URD, a mere 3.1 
percent. "Polarization" was the term used locally to describe the 
apparent transition of Venezuela's electoral contests into two-party 
affairs. It was yet another promising sign in the evolution of a sta- 
ble system of democracy. 

Venezuela had still another reason to be euphoric at the dawn 
of 1974. The October 1973 Arab-Israeli War had triggered a qua- 
drupling of crude oil prices in a period of only two months. When 
Perez assumed the presidency in February 1974, he was immedi- 
ately faced with the seemingly enviable task of managing a wind- 
fall of unprecedented proportions. To combat the inflationary 
pressures that would result from the sudden addition of some US$6 
billion in annual government revenues, Perez set up the Venezuelan 
Investment Fund (Fondo de Inversiones de Venezuela — FIV), with 
the objective of exporting 35 percent of this unexpected income 
as loans to Caribbean, Central American, and Andean neighbors. 
The greatest portion of this aid money went to the oil-importing 
nations of Central America in the form of long-term loans to pay 
for half of their oil-import bills. Venezuela also loaned out its "ex- 
cess capital" through various multilateral lending institutions, in- 
cluding the Inter- American Development Bank (IDB). 

The FIV loan program engendered considerable international 
goodwill on behalf of Venezuela, particularly among the recipient 
countries. Building on that prestige, Perez and Mexican president 
Luis Echeverria Alvarez (1970-76) founded the Latin American 
Economic System (Sistema Economico Latinoamericano — SELA). 
SELA, with headquarters in Caracas, had twenty- three Latin 
American nations as its initial members in 1975. It was formed 
to promote Latin American cooperation in international econom- 
ic matters such as commodity prices, scientific and technological 
exchange, and multinational enterprises and development projects. 
SELA, it was hoped, would help create the building blocks of a 



31 



Venezuela: A Country Study 

"new international economic order," in which the developing na- 
tions of the southern hemisphere would challenge the economic 
hegemony of the developed nations of the north. 

Perez's aggressive stance on behalf of the Third World helped 
to cool Venezuela's traditionally warm relations with the United 
States. Other contributing factors to this change included Venezue- 
la's displeasure with both the revelations of extensive covert inter- 
vention by the United States against the Allende government in 
Chile and the reluctance of the United States to begin negotiations 
with Panama over future control of the Panama Canal. The major 
irritant, however, was OPEC's petroleum policy, marked by 
OPEC's 1973 price increases, and the embargo on oil shipments 
to the United States instigated by the Arab members of OPEC dur- 
ing the October War. Despite the fact that Venezuela had increased 
its oil shipments at that time in order to meet United States needs, 
the United States retaliated against the embargo by excluding 
Venezuela, along with the other OPEC -member nations, from the 
1974 Trade Act, which created the Generalized System of Trade 
Preferences to lower tariffs on designated imports from develop- 
ing nations. Proud of never having denied the nation's oil to the 
United States, even during periods of war and political tensions, 
Venezuelans took offense at what they saw as unwarranted puni- 
tive action by the United States. 

At home, President Perez put aside his promised intention to 
"manage abundance with the mentality of scarcity," and embarked 
on a spending spree designed to distribute Venezuela's oil wealth 
among the citizenry. Price controls that subsidized the public con- 
sumption of food and other commodities were introduced. 
Government- authorized wage increases, combined with foreign ex- 
change controls that subsidized imports, led to periodic buying 
binges of Japanese stereos and televisions, German automobiles 
and cameras, and clothing and processed foods from the United 
States. Per capita consumption of Scotch whiskey soared to a level 
among the world's highest. Government subsidies assumed a var- 
iety of other forms as well: in 1974, US$350 million in debts owed 
to state agencies by the Venezuelan farming community were simply 
cancelled. 

The Perez administration initiated various other programs to 
spur employment. The 1974 Law of Unjustified Dismissals made 
it very difficult for employers to fire workers and mandated ample 
severance payments to those who did lose their jobs. Public em- 
ployment doubled in five years, reaching 750,000 by 1978. Although 
unemployment levels thus dropped precipitously, Venezuelans' 
traditional disdain for hard work increased, leaving many necessary 



32 



Historical Setting 



jobs either unfilled or filled by a growing number of indocumentados 
(undocumented or illegal aliens) from Colombia and Brazil. 

Although these subsidy and employment programs theoretical- 
ly sought to improve the lot of the poor, in fact, the actual out- 
come was that a significant portion of the population continued 
to live in a state of misery. Income distribution was less equitable 
in 1976 than it had been in 1960, and one study found that fully 
40 percent of the population nationwide were ill fed and under- 
nourished. This contrast of widespread poverty amidst urban de- 
velopment and the conspicuous consumption of the middle and 
upper classes was particularly damaging to Perez, who had been 
elected with a public image as a "friend of the people." AD's failure 
to address adequately the needs of the poor would plague the party 
during the 1978 electoral contest. 

The government continued, as it had been doing for nearly four 
decades, to put a large portion of its petroleum revenues into build- 
ing an industrial base, with the objective of generating future in- 
come after the nation's oil reserves had been depleted. With massive 
amounts of money to spend, emphasis was now placed on large- 
scale, high-technology infrastructure and industrial development 
projects. The Perez administration's Fifth National Plan, conceived 
during the mid-1970s and scheduled to become operative in 1977, 
accordingly called for some US$52.5 billion in investments over 
a five-year period. 

In an effort to minimize the bureaucratic entanglements entailed 
by such a major increase in the fiscal responsibilities of the central 
government, funding was instead vested in autonomous and semi- 
autonomous entities. The four years following the 1973-74 oil boom 
saw the creation of no fewer than 163 such entities, including tex- 
tile and lumber companies, a hydroelectric consortium, shipbuilding 
firms, and a national steamship company and airline. By 1978 the 
budget outlay for state-owned enterprises and decentralized agen- 
cies was 50 percent higher than the federal budget. 

The centerpiece of this state-directed program of industrial de- 
velopment was the massive industrial complex at Ciudad Guayana. 
Located near major deposits of iron and other raw materials in the 
vast Guiana highlands, the complex was placed under the super- 
vision of the Venezuelan Corporation of Guayana (Corporacion 
Venezolana de Guayana — CVG). Ciudad Guayana was developed 
during the early 1960s as an effort to decentralize industrial de- 
velopment away from Caracas. It attracted considerable private 
as well as public investment — most notably the Orinoco Steelworks 
(Siderurgica del Orinoco — Sidor), a CVG subsidiary — and grew 



33 



Venezuela: A Country Study 

quickly; by 1979 its population reached 300,000. During the Pe- 
rez administration, Sidor benefited from massive new investments, 
including a US$4 billion project designed to increase its refining 
capacity fivefold. The government erected modern, large-scale alu- 
minum and bauxite refineries and massive hydroelectric projects 
with a vision of converting the Orinoco Basin into a Venezuelan 
Rhineland. 

In January 1975, the government cancelled the iron ore conces- 
sions of subsidiaries of two United States-owned firms (United States 
Steel Corporation and Bethlehem Steel) operating in the Guiana 
highlands. It was not an unexpected move, as local ownership of 
raw-material extraction had been frequently addressed during the 
1973 presidential campaign. The nationalization process took place 
smoothly: the two companies accepted US$101 million in compen- 
sation and agreed to sign one-year management contracts to pro- 
vide continuity in the operation of the mines during the transition. 

Congressional approval, the following August, of a bill nation- 
alizing the petroleum industry had also been anticipated. The four- 
teen foreign oil companies involved did not object vigorously to 
the move; the Venezuelan government had granted them no new 
concessions since 1960, and their share of the profits from the 
petroleum they extracted had dropped to 30 percent. The US$1 
billion they received, although only a fraction of the replacement 
cost of the assets they surrendered (including 12 oil refmeries with 
an aggregate capacity of 1.5 million barrels of oil per day, along 
with some 12,500 oil wells), was generally believed to be as fair 
and generous a compensation as possible under the circumstances. 
The fourteen foreign firms were consolidated into four autonomous 
entities, modeled after the four largest of the foreign enterprises, 
and placed under the administrative supervision of the Venezue- 
lan Petroleum Corporation (Petroleos de Venezuela, S.A. — 
PDVSA), a holding company fashioned out of the CVP. General 
Rafael Alfonso Ravard, who had managed the CVG in a highly 
efficient, technocratic manner quite atypical of most government 
ventures, was chosen to head PDVSA. 

The Perez administration had devised its grandiose Fifth Na- 
tional Plan under the assumption that rising oil prices would boost 
government revenue throughout the 1970s. Instead, Venezuela's 
oil income leveled off in 1976, then began to decline in 1978. For- 
eign commercial banks, awash with petrodollars deposited by other 
OPEC nations, provided loans to make up the shortfall so that 
Venezuela's development program could proceed on schedule. On 
the one hand, the banks saw oil-rich Venezuela as an excellent credit 
risk, while, on the other hand, the autonomy of Venezuela's state 



34 



Historical Setting 



firms allowed them to borrow excessively, independent of central 
government accounting. To expedite their receipt of this external 
financing, the autonomous entities opted for mainly short-term 
loans, which carried higher rates of interest. As a result, by 1978 
the public-sector foreign debt had grown to nearly US$12 billion, 
a fivefold increase in only four years. An estimated 70 to 80 per- 
cent of this new debt had been contracted by the decentralized public 
administration. 

Between the vast increase in oil revenues before 1976 and the 
immense foreign debt incurred by the government, the Perez ad- 
ministration spent more money (in absolute terms) in 5 years than 
had all other governments during the previous 143 years combined. 
Perhaps inevitably, a great deal of money was squandered in mis- 
management and corruption. Despite expansive overseas programs 
to train managers of the new public entities, the lack of competent 
personnel to execute the government's many sophisticated en- 
deavors became painfully evident. The delays and myriad cost over- 
runs that ensued formed the backdrop of frequent malfeasance by 
public officials. Overpayment of contractors, with kickbacks to the 
contracting officers, was perhaps the most rampant form of graft. 
Featherbedding and the padding of payrolls with nonworking or 
nonexistent employees also became common practices. 

By the time of the December 1978 elections, these issues had 
brought serious doubts to the voters as to the competence and the 
probity of the AD government. AD's candidate, Luis Pinerua Or- 
daz, lost to COPEI's Luis Herrera C ampins by a little over 3 per- 
centage points. The loss had less to do with the program presented 
by either candidate than with the public's rejection of the free- 
spending, populist style of President Perez. Otherwise, the 1978 
campaign was most notable for the vast sums spent by the two major 
candidates on North American media consultants. More than any 
previous electoral contest, this campaign was conducted on televi- 
sion, increasing the relative importance of image over substance. 
The two major parties captured almost 90 percent of the total vote; 
a divided left shared 8.5 percent of the total among four candi- 
dates. In the subsequent June 1979 municipal council elections, 
however, the MAS, MEP, PCV, and MIR presented a united slate 
that captured a more impressive 18.5 percent of the vote. 

Announcing during his March 1979 inaugural address that 
Venezuela could not continue as a "nation that consumes rivers 
of whiskey and oil," President Herrera promised to assume an 
austere posture toward government fiscal concerns. Public spending, 
including consumer subsidies, was ordered cut, and interest rates 
were increased to encourage savings. When the Iranian Revolution 



35 



Venezuela: A Country Study 

and the outbreak of the Iran-Iraq War caused oil prices to jump 
from US$17 per barrel in 1979 to US$28 in 1980, however, He- 
rrera abandoned his austerity measures before they had had a 
chance to yield results. 

Early on in his term of office, President Herrera also pledged 
to pursue policies aimed at reviving the moribund private sector. 
However, the first of these measures, the elimination of price con- 
trols, only contributed further to rising inflation. As with his com- 
mitment to austerity, the president failed to persist in his pledge 
to business; yielding to political pressures from the AD-dominated 
Confederation of Venezuelan Workers (Confederation de Trabaja- 
dores de Venezuela — CTV), in October 1979 the administration 
approved sizable wage increases. Meanwhile, the number of those 
employed by state-owned enterprises and autonomous agencies, 
which Herrera had promised to streamline and make more efficient, 
proliferated instead. The administration initiated, among other pro- 
jects, a huge coal and steel complex in the state of Zulia, a new natur- 
al gas plant with 1,000 kilometers of pipeline, a new railroad from 
Caracas to the coast, and a bridge linking the Caribbean Isla de 
Margarita with the mainland, running in the process a deficit of 
some US$8 billion between 1979 and 1982. A retired Venezue- 
lan diplomat, writing in The Miami Herald in 1983, noted that, "There 
must be examples of worse fiscal management than that of Venezuela 
in the last eight or nine years, but I am not aware of them." 

The lack of confidence in President Herrera' s economic manage- 
ment by the local business community contributed significantly to 
a precipitous decline in the growth of real gross domestic product 
(GDP — see Glossary) from an annual average of 6.1 percent be- 
tween 1974 and 1978 to a sickly -1.2 percent between 1979 and 
1983. Unemployment hovered around 20 percent throughout the 
early 1980s. 

An unexpected softening of oil prices during late 1981 triggered 
further fiscal problems. World demand for oil — on which the 
Venezuelan government depended for some two-thirds of its 
revenues — continued to decline as the market became glutted with 
oil from newly exploited deposits in Mexico and the North Sea. 
The resumption of large-scale independent borrowing by the de- 
centralized public administration came amidst publicly aired dis- 
agreements among various officials as to the magnitude of the 
foreign debt. Not until 1983 did outside analysts agree on an ap- 
proximate figure of US$32 billion. 

Compounding growing balance of payments difficulties, rumors 
of an impending monetary devaluation precipitated a wave of pri- 
vate capital flight overseas in early 1983. While the Central Bank 



36 



Historical Setting 



of Venezuela (Banco Central de Venezuela — BC V) president ar- 
gued with the finance and planning ministers over what measures 
to adopt to meet the growing crisis, some US$2 billion left the coun- 
try during January and February alone. At the end of February, 
the government at last announced a system of foreign exchange 
controls and a complicated three-tier exchange system. Under this 
system, the public sector retained the existing rate of US$1 = B4.3, 
selling bolivars (B; for value of the bolivar — see Glossary) to the 
private sector at a higher rate of US$1 = B6.0 or more, while a free- 
floating rate was established for tourism, "nonessential" imports 
(luxury items), and other purposes. At the same time, price con- 
trols were reinstated to control inflation. The annual increase in 
consumer prices, which had hit a peak of 21.6 percent in 1980, 
fell to 6.3 percent for 1983. 

Seeking a way out of the dismal economic situation, the He- 
rrera administration decided to transfer a greater share of ever- 
growing government expenses to PDVSA. The Central Bank of 
Venezuela appropriated some US$4.5 billion of PDVSA' s reserves 
to pay the foreign debt, thereby throwing the petroleum corpora- 
tion's autonomy to the wind. Partisan politics began to play a larger 
role in the selection of members of PDVSA' s board of directors. 
In September 1983, Ravard was forced out as head of PDVSA and 
replaced by Humberto Calderon Berti, who as minister of energy 
had spearheaded the effort to bind the oil giant closer to the cen- 
tral government. The rapid politicization of PDVSA drew criti- 
cism both at home and abroad and cost the government credibility 
as well as its good credit rating with foreign banks. The unceremoni- 
ous firing of the highly respected Ravard was condemned by both 
candidates for the December presidential election and was reversed 
by the new administration the following February. 

By historical standards, the 1983 electoral campaign was a dull 
affair. Enjoying a substantial lead in opinion polls from the start, 
AD 's Jaime Lusinchi coasted to an easy victory over former presi- 
dent Caldera, who was burdened with both the miserable record 
of the outgoing COPEI administration and the undisguised hostility 
of his fellow copeyano, President Herrera. Lusinchi, a physician with 
no previous administrative experience, ran a campaign that focused 
on the failings of the Herrera administration, and won the contest 
on December 4 with 56.8 percent of the valid vote, the highest per- 
centage gained by a candidate since the dawn of the democratic 
era in 1958. Caldera gained 34.9 percent; the combined vote of 
the two candidates on the left totaled 7.4 percent. 

Although the 1983 elections again demonstrated the predominance 
of the two major parties, the record of ineffective government 



37 



Venezuela: A Country Study 

(known locally as desgobierno), corruption, an increasing foreign debt, 
and a growing list of unaddressed socioeconomic problems all con- 
tributed to a widespread disillusionment with the political process 
among the electorate. After twenty-five years of gradual consoli- 
dation of democracy in Venezuela, doubts had emerged as to the 
future stability of the much-cherished democratic political process 
that had proven so elusive before 1958. 

* * * 

There is a wealth of first-rate literature in English on the history 
of Venezuela. Perhaps the most useful general histories are Judith 
Ewell's Venezuela: A Century of Change and John V. Lombardi's 
Venezuela: The Search for Order, the Dream of Progress. On the all- 
important oil industry, volumes by Romulo Betancourt {Venezue- 
la's Oil and Venezuela: Oil and Politics) and Franklin Tugwell's The 
Politics of Oil in Venezuela are standards, while Jorge Salazar-Carrillo's 
Oil in the Economic Development of Venezuela treats the subject from 
the standpoint of economic rather than political history. George 
W. Schuyler's Hunger in a Land of Plenty examines the tragic irony 
of poverty amidst Venezuela's vast oil wealth. 

Robert L. Gilmore's Caudillism and Militarism in Venezuela, 
1810-1910 remains a valuable source of information on nineteenth- 
century caudillismo. The crucial period of the transition to democra- 
cy during the 1940s and 1950s is examined in The Venezuelan 
Democratic Revolution by Robert J. Alexander and in Conflict and Po- 
litical Change in Venezuela by Daniel H. Levine. Stephen G. Rabe, 
in The Road to OPEC: United States Relations with Venezuela, 1919-1976, 
provides the most comprehensive look at Venezuela's important 
relationship with the United States. (For further information and 
complete citations, see Bibliography.) 



38 



Chapter 2. The Society and Its Environment 




View of Angel Falls 



THROUGHOUT MOST OF ITS HISTORY, Venezuela re- 
mained a poor country with a rigidly stratified, largely rural popu- 
lation. The political system in the long era of caudillismo (rule by 
local strongmen, or caudillos) was one in which shifting factions, 
loosely organized around competing caudillos, vied for dominance 
over disenfranchised masses. A minuscule upper class of wealthy 
hacendados, whose income derived from cocoa and coffee planta- 
tions, controlled the economy. This group based their superior status 
on their light skin and on Hispanic cultural and social norms estab- 
lished during the colonial period. Despite its power, prestige, and 
wealth, however, the upper stratum never formed the sort of cohe- 
sive, entrenched oligarchy so common throughout most of the rest 
of the continent. Venezuela's comparative poverty — its lack of gold 
or precious stones — limited the attention it received from Spain; 
fewer Spaniards ventured to Venezuela than to nearby Colombia 
or more distant Peru. The colonial period, therefore, did not pro- 
duce an opulent upper class, either Spanish or native born. 

Below this small, modestly rich, and fragmented upper class was 
a somewhat larger, but still limited, middle stratum. This group 
consisted of soldiers, artisans, craftsmen, bureaucrats, and small 
traders. Farther down the social ladder was the vast bulk of the 
population. Persons in this stratum, who were considered and con- 
sidered themselves lower class, consisted largely of peasants of mixed 
descent. They had different values, life- styles, family patterns, and 
religious practices from those of the upper class. These Venezue- 
lans played only a marginal role in the country's affairs. They oc- 
cupied a subordinate and dependent position in the socioeconomic 
structure and exercised political influence only by joining the ranks 
of the local caudillo's personal militia. 

Independence effected few changes in the relative position and sizes 
of these three classes. Indeed, until the discovery and exploitation 
of large quantities of oil in the first two decades of the twentieth 
century, Venezuela's economy and society exhibited a traditional 
agrarian pattern dominated by the production of export crops, such 
as cocoa and coffee, and some cattle raising. The shift to oil and 
the subsequent expansion of manufacturing eradicated the old order. 
In less than a generation, Venezuela became a far more modern, 
urban-based society. By 1960 some 60 percent of the population lived 
in cities of over 5,000 inhabitants, and the population of metropoli- 
tan Caracas numbered over a million. 



41 



Venezuela: A Country Study 

Middle-class Venezuelans became a highly mobile people, mov- 
ing regularly from place to place and job to job. Traditional values 
changed in ways that made the society more open and class bound- 
aries more flexible. The ongoing process of value modification con- 
tributed to changes that accelerated in the 1970s and 1980s, as more 
women entered the universities and the labor force and more citizens 
participated in the liberalized political system. In the 1990s, 
Venezuelan society still exhibited enormous differences between 
its upper and its lowest strata. But the social system had become 
more permeable, and the urban middle class had become proba- 
bly the most effective group involved in the country's vigorous par- 
tisan politics. Many Venezuelans therefore felt that the greatest 
challenge to their sociopolitical system lay not in further involve- 
ment of the middle class, but in responding to the concerns of the 
still large group at the base of the societal pyramid. 

Geography 

Located at the northernmost end of South America, Venezuela 
has a total area of 912,050 square kilometers and a land area of 
882,050 square kilometers, about twice the size of California. 
Shaped roughly like an inverted triangle, the country has a 
2,800-kilometer coasdine and is bounded on the north by the Carib- 
bean Sea and the Atlantic Ocean, on the east by Guyana, on the 
south by Brazil, and on the west by Colombia (see fig. 2). 

Topography 

Most observers describe Venezuela in terms of four fairly well- 
defined regions: the Maracaibo lowlands in the northwest, the 
northern mountains extending in a broad east-west arc from the 
Colombian border along the Caribbean Sea, the wide Orinoco 
plains (llanos — see Glossary) in central Venezuela, and the highly 
dissected Guiana highlands in the southeast. 

The Maracaibo lowlands form a large spoon-shaped oval bound- 
ed by mountains on three sides and open to the Caribbean on the 
north. The area is remarkably flat with only a gentle slope toward 
the center and away from the mountains that border the region. 
Lago de Maracaibo occupies much of the lower-lying territory. 
Areas around the southern part of Lago de Maracaibo are swampy, 
and, despite the rich agricultural land and significant petroleum 
deposits, the area was still thinly populated in 1990. 

The mountains bordering the Caribbean Sea are actually the 
northeasternmost extension of the Andes chain. Broken by several 
gaps, these high mountains have peaks over 4,500 meters; the fertile 
valleys between the ranges contain most of Venezuela's population, 



42 




Figure 2. Topography and Drainage 



44 



The Society and Its Environment 



industry, and agriculture. The discontinuous westernmost range 
runs along the Colombian border and is the least densely populat- 
ed part of this region. The ranges southeast of Lago de Maracaibo 
contain some of the highest peaks in the country (Pico Bolivar 
reaches 5,007 meters), a few of which are snowcapped year-round. 

A broad gap separates this mountainous area from another 
rugged pair of ranges that parallel the north-central coast. The series 
of valleys between these two parallel ranges constitute the core area 
of the country; as the site of burgeoning metropolitan Caracas, this 
comparatively small area hosts the country's densest population, 
the most intensive agriculture, and the best transportation network. 
Another broad gap separates this area from the easternmost group 
of mountains, a series of dissected hills and uplands that rise steep- 
ly from the Caribbean and extend eastward almost to Trinidad. 

The great expanse of lowlands known as the Orinoco plains ex- 
tends westward from the Caribbean coast to the Colombian bor- 
der between the northern mountains and the Rio Orinoco. This 
region is commonly known as the llanos, although it also contains 
large stretches of swampland in the Orinoco Delta and near the 
Colombian border. The area slopes gradually away from the high- 
land areas that surround it; elevations in the llanos never exceed 
200 meters. North of the Rio Apure, rivers flowing out of the north- 
ern mountains cut shallow valleys, leaving eroded ridges that give 
the land a gently rolling appearance. South of the Apure, the ter- 
rain is flatter and elevations lower. 

One of the oldest land forms in South America, the Guiana high- 
lands rise almost immediately south and east of the Rio Orinoco. 
Erosion has created unusual formations in this region. Compris- 
ing over half of the country, the highlands consist primarily of 
plateau areas scored by swiftly running tributaries of the Orinoco. 
The most conspicuous topographical feature of the region is the 
Gran Sabana, a large, deeply eroded high plateau that rises from 
surrounding areas in abrupt cliffs up to 800 meters high. Above 
the rolling surface of the Gran Sabana, massive, flat- topped bluffs 
emerge; many of these bluffs (referred to as tepuis by the Venezue- 
lans) reach considerable altitudes. The most famous tepui contains 
Angel Falls, the world's highest waterfall. 

Climate 

Although the country lies wholly within the tropics, its climate 
varies from tropical humid to alpine, depending on the elevation, 
topography, and the direction and intensity of prevailing winds. 
Seasonal variations are marked less by temperature than by rain- 
fall. Most of the country has a distinct rainy season; the rainy period 



45 



Venezuela: A Country Study 

(May through November) is commonly referred to as winter and 
the remainder of the year as summer. 

The country falls into four horizontal temperature zones based 
primarily on elevation. In the tropical zone — below 800 meters — 
temperatures are hot, with yearly averages ranging between 26°C 
and 28°C. The temperate zone ranges between 800 and 2,000 
meters with averages from 12°C to 25°C; many of Venezuela's 
cities, including the capital, lie in this region. Colder conditions 
with temperatures from 9°C to 11°C are found in the cool zone 
between 2,000 and 3,000 meters. Pastureland and permanent snow- 
field with yearly averages below 8°C cover land above 3,000 in 
the high mountain areas known as the paramos. 

Average yearly rainfall amounts in the lowlands and plains range 
from a semiarid 430 millimeters in the western part of the Carib- 
bean coastal areas to around 1 ,000 millimeters in the Orinoco Delta. 
Rainfall in mountainous areas varies considerably; sheltered val- 
leys receive little rain, but slopes exposed to the northeast trade 
winds experience heavy rainfall. Caracas averages 750 millimeters 
of precipitation annually, more than half of it falling from June 
through August. 

Hydrography 

The Orinoco is by far the most important of the more than 1 ,000 
rivers in the country. Flowing more than 2,500 kilometers to the 
Atlantic from its source in the Guiana highlands at the Brazilian 
border, the Orinoco is the world's eighth largest river and the larg- 
est in South America after the Amazon. Its flow varies substan- 
tially by season, with the high- water level in August exceeding by 
as much as thirteen meters the low levels of March and April. Dur- 
ing low-water periods, the river experiences high and low tides for 
more than 100 kilometers upstream from Ciudad Guayana. 

For most of the Orinoco's course, the gradient is slight. Down- 
stream from its headwaters, the Orinoco splits into two; one-third 
of its flow passes through the Brazo Casiquiare (Casiquiare Chan- 
nel) into a tributary of the Amazon, and the remainder passes into 
the main Orinoco channel. This passageway allows vessels with 
shallow drafts to navigate from the lower Orinoco to the Amazon 
River system after unloading and reloading on either side of two 
falls on the Orinoco along the Colombian border. 

Most of the rivers rising in the northern mountains flow 
southeastward to the Rio Apure, a tributary of the Orinoco. From 
its headwater, the Apure crosses the llanos in a generally eastward 
direction. Few rivers flow into it from the poorly drained region 



46 



Angel Falls, the world's highest waterfall, in southeastern Venezuela 
Courtesy Martie B. Lisowski Collection, Library of Congress 



47 



Venezuela: A Country Study 

south of the river, and much of this area near the Colombian border 
is swampland. 

The other major Venezuelan river is the fast-flowing Carom, 
which originates in the Guiana highlands and flows northward into 
the Orinoco upstream from Ciudad Guyana. The Carom is capa- 
ble of producing as much hydroelectric power as any river in Latin 
America and has contributed significantly to the nation's electric 
power production (see Electricity, ch. 3). Electricity generated by 
the Carom was one of the factors encouraging industrialization of 
the northern part of the Guiana highlands and the lower Orinoco 
valley. 

The Lago de Maracaibo, the largest lake in Latin America, oc- 
cupies the central 13,500 square kilometers of the Maracaibo 
lowlands. The low swampy shores of the lake and areas beneath 
the lake itself hold most of Venezuela's rich petroleum deposits. 
The lake is shallow, with an average depth of ten meters, and sepa- 
rated from the Caribbean by a series of islands and sandbars. In 
1955 a 7.5-meter channel was cut through the sandbars to facili- 
tate shipping between the lake and the Caribbean. The channel 
also allows salt water to mix with the yellowish fresh water of the 
lake, making the northern parts brackish and unsuited for drink- 
ing or irrigation. 

Population Dynamics 

Three races contributed significantly to the composition of the 
Venezuelan population: Indians, whites, and Africans. The Indi- 
ans of the region belonged to a number of distinct tribes. Those 
who devoted themselves to agriculture and fishing belonged mainly 
to the Arawak, Ajaguan, Cumanagoto, Ayaman, and other Carib 
tribes. The Guajiro lived, as they still do today, in the area that 
became the state of Zulia (see fig. 1). The Timoto-Cuica lived in 
the states of Tachira, Merida, Trujillo, and Lara. The Caquetfo, 
who prevailed in the area of present-day Falcon state, developed 
probably the highest cultural state of civilization of all the indigenous 
groups. A number of tribes also lived, as the Guajiro still do, in 
the Amazon jungle. Compared with other Latin American coun- 
tries, however, Venezuela never had a large Indian population. 
After discovery by Spain, this population diminished still further, 
mainly because the natives lacked immunity to the many diseases 
brought to the New World from Europe (see Discovery and Con- 
quest, ch. 1). In addition, Indians and Spanish intermarried; the 
product of this union, the mestizo, often opted for or was forced 
into assuming Spanish customs and religion. Fewer than 150,000 
Indians were counted in the 1981 census, and, of these, over a third 



48 



The Society and Its Environment 

were made up of the Guajiro, who, though distinctive, were most- 
ly Roman Catholic, wore their own version of Western-style cloth- 
ing, and traded openly with other Venezuelans and Colombians. 

During the colonial period, white settlers immigrated mostly 
from Spain. Blacks were brought from Africa as slaves to replace 
the large numbers of Indians who died from diseases and other 
consequences of the conquest. The African slaves labored in the 
hot, equatorial coastal plantations. Although miscegenation was 
widespread, it did not diminish the importance of color and social 
origin. In colonial society, peninsulares (those born in Spain) en- 
joyed the greatest prestige and power. Criollos (those born in Ameri- 
ca of Spanish parentage) occupied a subordinate position. Mestizos, 
blacks, and Indians made up the large lower end of the social hier- 
archy. Even at these lower levels, those who could somehow demon- 
strate a measure of white ancestry enhanced their chances of 
avoiding a life of penury. 

Although the criollos resented the peninsulares, they did not identify 
or empathize with the lower strata. Instead, they remained deeply 
aware of the potential for trouble from the large mass below them 
and employed a variety of means to keep the nonwhite peoples at 
a safe distance. Despite their sometimes disreputable personal back- 
grounds, peninsulares boasted that they had pure white pedigrees. 
Circumstances rendered the ancestry of some criollos more ques- 
tionable, and even the wealthiest were conscious of race mixture 
and anxious to dispel any doubts as to their parentage by remain- 
ing as separate from the nonwhite population as possible. Percep- 
tions of race, however, evolved somewhat over time in response 
to changing social, political, and even cultural interests. 

Reforms in the eighteenth century affected race relations by en- 
hancing the social mobility of the crown's nonwhite subjects. During 
this period, persons of mixed racial origin, or pardos (see Glossary), 
were allowed, for a price, to join the militia, to obtain an educa- 
tion, to hold public office, and to enter the priesthood. They could 
even purchase legal certification of their "whiteness." These 
changes eliminated most of the few distinctions that had set the 
criollos apart from the darker- skinned masses {pardos at that time 
represented more than 60 percent of the population). Feeling their 
already tenuous position in society threatened, most Venezuelan 
criollos rejected the social policy of the Bourbons and established 
themselves in the forefront of the revolutionary movement for in- 
dependence. 

Not all criollos, however, sought to preserve the system in which 
pardos served as virtual vassals of the upper class. Twentieth-century 
Venezuelan history books proudly recount the late eighteenth-century 



49 



Venezuela: A Country Study 

radical conspiracy of the retired army officer Manuel Gual and the 
hacienda owner Jose Maria Espafia, who advocated a republic that 
would incorporate all races and peoples equally. Inspired by the 
rhetoric of the French Revolution, the small group led by Gual 
and Espafia recruited pardos, poor whites, laborers, and small shop- 
keepers, calling for equality and liberty and for harmony among 
all classes. They also promised to abolish Indian tribute and black 
slavery and to institute free trade. Although Gual and Espafia also 
invoked the example of the newly established United States, they 
received no encouragement from the young country. When the con- 
spiracy surfaced in La Guaira in 1797, the Spanish authorities ter- 
minated the movement in its early stages. Not surprisingly, criollo 
property owners collaborated with the authorities to suppress the 
radical movement. 

During the wars of independence, both criollo revolutionaries 
and Spanish loyalists sought to engage blacks and pardos in their 
cause. This competition opened up new paths for advancement, 
mainly by way of the battlefield. Many of the revolutionary ar- 
mies depended heavily upon the pardos to fill their ranks; many 
pardos also served as officers. Of greater significance for nineteenth- 
century Venezuelan society, the wars of independence brought to 
the fore a new class of leaders of mixed social and racial origins, per- 
haps best exemplified by Jose Antonio Paez, a fiery llanero (plains- 
man). Paez and leaders like him represented in almost every respect 
the antithesis to the cerebral, worldly wise, white, and refined Simon 
Bolivar Palacios and others of his class. 

Paez governed Venezuela either direcdy as president or indirecdy 
through his friends in the presidential office from 1830 to 1848 (see 
A Century of Caudillismo, ch. 1). It was a period of slow but un- 
deniable transformation of Venezuelan society. Although traditional 
exports such as cotton, cocoa, tobacco, and beef expanded, coffee 
soon came to dominate agricultural production. The transition to 
coffee brought changes to Venezuelan society. Coffee growing was 
less labor intensive than most agricultural pursuits; even in colonial 
times, it operated mostly under systems of sharecropping and 
seasonal labor, rather than slavery. During the nineteenth century, 
small farmers increased their share of national coffee production 
and, consequently, they moved upward on the social ladder. 

Toward the end of the century, after the years of the Federal 
War (1858-63), fissures once again appeared in Venezuelan society 
as new social elements arose, often defying traditional class, ra- 
cial, and geographic status categories. As in so much of the coun- 
try's history, a personality, another caudillo, best exemplified the 
new social order. In this case, the caudillo was Juan Vicente Gomez, 



50 



The Society and Its Environment 



a semiliterate Andean who dominated the national political scene 
from 1908 to 1935. Although often pictured as a traditional caudillo, 
Gomez did more than merely advance his own interests and those 
of his clique; he presided over the transformation of Venezuela from 
a rural to an urban society, from an agrarian to an industrial 
economy. 

The illegitimate son of an Indian mother and a Spanish im- 
migrant, Gomez rose to prominence first as a local and later a na- 
tional caudillo. Once in control of the national government, he 
brought prosperity to Venezuela through a regime of repression, 
austerity, and reform. Perhaps most important, Gomez opened the 
Venezuelan oil fields for exploration beginning in the second de- 
cade of the twentieth century; by 1928 Venezuela had become the 
world's leading exporter of petroleum, second only to the United 
States in total petroleum production. 

The impact of oil on Venezuelan society was enormous. Gomez 
used oil revenues to bolster his authoritarian regime. The high- 
way system he built helped to centralize his control over the coun- 
try. Agriculture rapidly lost its preeminence as petroleum became 
the country's leading export. Oil profits funded public works pro- 
grams, industrialization, port expansions, urban modernization, 
and payment of the public debt. The new revenue also made Gomez 
and his cronies immensely rich. At the same time, Venezuela en- 
tered a new stage in its economic and social development. Tradi- 
tionally self-sufficient in food, the country began to import even 
basic foodstuffs. The petroleum workers, never more than 3 per- 
cent of the labor force, formed an elite union that served as the 
nucleus of a new labor movement. The promise of jobs, prosperity, 
and social advancement drew Venezuelans from every corner of 
the country to the cities of Caracas and Maracaibo. In just a few 
short decades, rural agricultural Venezuelan society became ur- 
ban and industrial; the middle class expanded; ethnic groups mixed 
more readily; and a once largely isolated society found itself in- 
volved with the rest of the world. 

Population Profile 

Sixth in size among the Latin American countries, Venezuela 
was one of the Western Hemisphere's least densely populated coun- 
tries. But despite a low overall population density (21.4 persons 
per square kilometer in 1987), distribution was extremely uneven 
(see table 2; table 3, Appendix). Most of its nearly 20 million in- 
habitants (19,698,104, according to a mid- 1990 estimate) were con- 
centrated in the northwest and the mountains along the coast. 
Although nearly half of the land area lies south and east of the Rio 



51 



Venezuela: A Country Study 

Orinoco, that area contained only about 4 percent of the popula- 
tion in the late 1980s. About 75 percent of the total population lived 
in only 20 percent of the national territory, mainly in the northern 
mountains (Caracas and surrounding areas) and the Maracaibo 
lowlands. In the 1990s, the north, the site of most of the country's 
first colonial cities, agricultural estates, and urban setdements, re- 
mained the administrative, economic, and social heartland of the 
country. Most of the population was concentrated along the coast 
and in the valleys of the coastal mountain ranges, and about one 
of every five Venezuelans lived in Caracas. Only three major in- 
land urban centers existed in the early 1990s: Barquisimeto, Ciudad 
Guayana, and Valencia. This concentration of population persisted 
in spite of a number of government programs that provided in- 
centives to relocate industry and tried to expand educational op- 
portunities throughout the rest of the country. 

Venezuela's population growth rate (2.5 percent in 1990) re- 
mained among the highest in the world, fed by both a high birth 
rate (28 births per 1,000 population in 1990) and a comparatively 
low death rate (4 deaths per 1,000 population in 1990) — mainly 
a result of improved health and sanitary conditions after World 
War II. The average annual population increase for the period 
1950-86 was 3.4 percent. Only in the 1970s and 1980s did it be- 
gin to level off somewhat, dropping to 2.7 percent by 1986 and 
to 2.5 percent by 1990. This still-high growth rate was all the more 
surprising in light of the widespread availability of contraceptives 
and Venezuelans' comparatively high education level and standard 
of living, social indicators that normally correlate with much low- 
er rates of natural increase. 

On average, postwar Venezuela roughly doubled its population 
every twenty years. The prevailing demographic patterns indicated 
that the population would more than double during the period 
1990-2010. The number of births per woman, however, had be- 
gun to decline by 1990 (to 3.4), and this decline eventually should 
be reflected in lower growth figures. But any substantial reduc- 
tion in the overall growth rate was not expected until sometime 
in the twenty-first century. 

Although population figures based on census data were quite ac- 
curate for the decades after World War II, the same could not be 
said for the figures on mortality, particularly the figures generated 
at the state level. Deaths were undercounted, particularly those of 
infants and young children. Thus, one could not reliably compare 
mortality rates among individual states because a higher mortality 
rate in one state might not, in fact, reflect greater mortality, but 
simply better record keeping. Nationally, the infant mortality 



52 



The Society and Its Environment 



rate in 1990 was 27 deaths per 1 ,000 live births, and life expectancy 
was seventy-one years for males and seventy-seven years for fe- 
males. Both of these figures ranked among the best in Latin America 
(see Health and Social Security, this ch.). 

In the mid-1980s, about 40 percent of the population was under 
fifteen years of age; about 70 percent was under thirty (see fig. 
3). The last major influx of European immigrants took place in 
the early 1950s, when large numbers of Spanish, Italian, and Por- 
tuguese immigrants arrived, attracted by massive government con- 
struction projects. The 1981 census showed that 94 percent of the 
people were native born. Of the foreign born, most came from 
Spain, Italy, Portugal, Africa, and Colombia. As of 1986, about 
17,000 United States citizens also were living in Venezuela. 

Migration 

The most striking phenomenon in the distribution of the 
Venezuelan population has been the shift from a highly rural to 
an overwhelmingly urban population in response to the process 
of economic growth and modernization occasioned by the develop- 
ment of the oil industry. Venezuelan census figures defined urban 
localities as those having more than 2,500 inhabitants, rural areas 
as those with under 1 ,000 inhabitants, and areas with between 1 ,000 
and 2,500 inhabitants as intermediate. Most demographers, 
however, categorized these intermediate areas as urban. The 1941 
census indicated that about two-thirds of the population resided 
in rural areas. By 1950 a major shift had occurred, as the census 
showed that more than 53 percent of the population was urban. 
By 1975 the urban population was estimated at over 82 percent; 
the figure surpassed 85 percent in the late 1980s. 

In the thirty-year period between 1941 and 1971, the absolute 
number of rural people remained almost constant at 2.3 million, 
and the number of persons in large cities mushroomed. The rural 
areas experiencing the most intense out-migration were located in 
the states of Tachira, Merida, and Trujillo. In 1941 only two cities, 
Caracas and Maracaibo, had more than 20,000 inhabitants. By 
1971 there were eight cities with over 100,000 persons (see table 
4, Appendix). In 1981 there were nine such cities. In 1989 the es- 
timated population of the four largest cities was: Caracas, 3,500,000; 
Maracaibo, 1,350,000; Valencia, 1,250,000; and Barquisimeto, 
nearly 1,000,000. 

In addition to its high natural growth rate, Venezuela also 
received a considerable number of foreign immigrants during the 
twentieth century. Influenced by provisions encouraging the im- 
migration of skilled workers under the 1936 Law on Immigration 



53 



Venezuela: A Country Study 



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10-14 






i 






5-9 






1 




0-4 




i 




I 


r i -i r — r t t 1 

3 6 4 2 2 4 6 J 
PERCENT TOTAL POPULATION 


3 



Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt, 
Landerbericht Venezuela, 1987, Wiesbaden, 1987, 18. 



Figure 3. Estimated Population by Age and Sex, mid- 1985 

and Settlement, a wave of immigrants arrived during the first years 
after World War II. The period of the Marcos Perez Jimenez dic- 
tatorship (1948-58) saw over a million people enter the country. 
Many of them came to help build major government public works 
projects; these workers effectively undermined the role of domes- 
tic labor and weakened the position of the then-underground labor 
unions. Many saw the government's 1959 suspension of Perez's 
immigration policy as a reflection of the bitterness felt by some 
groups toward these immigrant workers. 

Immigrants to Venezuela tended to come from a fairly small 
number of countries. About 30 percent of the foreign-born were 
Colombians. Spaniards accounted for about 25 percent of the 
total, Italians and Portuguese about 15 percent each. The balance of 
immigrants came from Africa, the Middle East, Chile, Uruguay, 
Argentina, or Cuba. Many of these were political or economic 



54 



The Society and Its Environment 



refugees who found both economic opportunity and a democratic 
haven in Venezuela. 

In addition to the officially recognized immigrants entering the 
country, many Colombians (and a far smaller number of Brazilians) 
have entered illegally. Although the actual number was unknown, 
it probably ranged between 500,000 and 1,000,000 indocumentados 
(undocumented or illegal aliens). These indocumentados suffered ex- 
ploitation and discrimination; many Venezuelans considered them 
criminal elements. In reality, most crossed the border simply in 
search of better economic conditions. Most of them, farm or ur- 
ban laborers, came in response to the lure of salaries several times 
as high as those prevailing in Colombia. Others were seasonal work- 
ers; about 15,000 reportedly entered each year to work as field hands 
during the harvest season. Still others entered to take jobs on farms 
or in factories for a longer time, but with the intention of eventu- 
ally returning home. Most did stay, however, particularly in the 
northwestern states of Tachira and Zulia, where most of the bor- 
der crossings took place. Some eventually migrated farther into the 
country, to Maracaibo or Caracas. Maracaibo hosted the largest 
urban concentration of Colombian indocumentados, who found work 
in the construction, petroleum, and other industries. 

The illegal migration reportedly slowed down somewhat in the 
1980s as a result of Venezuela's extended period of economic depres- 
sion. Jobs became scarcer, and more Venezuelans found themselves 
seeking employment in occupations they had previously considered 
beneath their dignity. At the same time, complaints of mistreat- 
ment from Colombians in Venezuela increased, and a growing 
number of Colombian migrants apparently opted to travel to the 
United States. 

Settlement Patterns 

Venezuelans referred to their few major cities as ''poles of at- 
traction." These poles indeed functioned as magnets, drawing the 
population from the interior of the country to the urban centers. 
The 1971 census evidenced the mobility of the population when 
it indicated that a larger percentage of urban dwellers had come 
from some other place in the country than from the city where they 
lived. For example, less than 30 percent of the population of Caracas 
had been born there. 

By the 1970s, the population of Caracas was spilling over into 
smaller towns and cities in adjacent administrative units. As a result, 
the Metropolitan Urban Commission was established in 1973 to 
be responsible for city planning for the entire metropolitan area. 



55 



Venezuela: A Country Study 



By the late 1980s, a rapid-rail transportation system connected the 
capital with some outlying towns. Another means of relieving con- 
gestion was the Caracas Metro (Compama Anonima Metro de 
Caracas — Cametro), a modern subway system that served a limited 
area of the capital. 

The government sought to encourage reverse migration, the return 
of urban settlers to rural areas, but the results proved disappoint- 
ing. The National Agrarian Institute (Instituto Nacional Agrario — 
INA) conducted a program providing incentives for rural coloniza- 
tion and resettlement, but, ironically, the more economically suc- 
cessful setdements produced such high population growth that they 
became, in effect, new urban centers. The government also attempted 
to create other poles of attraction through publicly funded industri- 
alization projects. The best example of this policy was Ciudad 
Guayana, which at its founding in 1961 was planned to accommo- 
date no more than 300,000 persons. By 1990 the government project- 
ed that the city, with its industrial complex and concentration of 
government services, would boast a population of one million before 
the end of the twentieth century. During the 1960s, the government 
also initiated a project to open up the sparsely populated public lands 
of the Orinoco Delta. Through swamp reclamation, the government 
expected to make some 1.6 million hectares available for year-round 
agricultural use. Other programs included the planned setdement 
of families along the country's frontiers, especially in the state of 
Bolivar near the Brazilian border. 

In spite of these various attempts to manage migration patterns, 
Caracas continued to overshadow all other cities. In fact, some years 
the capital grew at the incredible rate of 7 percent annually. Such 
growth caused tremendous economic and social problems and trig- 
gered crises in the delivery of public services, especially as oil revenues 
dwindled. 

Different sections of the country reflected quite different life-styles. 
Caracas was a modern, sophisticated, cosmopolitan city. Its citizens 
contrasted sharply with the llaneros, persons of the interior plains 
and catde-ranching areas, who continued to lead a rugged existence. 
By the same token, the more conservative Andean peasants also 
shared few values or perspectives with their fellow citizens from the 
capital. 

The effects of rapid urbanization are strikingly apparent in the 
poor barrios of Caracas, with their ramshackle ranckos (see Glossary). 
Most of the inhabitants of these barrios came from fairly good-sized 
towns or were actually born in Caracas, rather than gravitating 
direcdy from the hinterland to the capital city. Studies have shown 
that residents of the barrios were, on average, even younger than 



56 




Urban squatter settlements, commonly known as ranchos, in Caracas 

Courtesy Inter-American Development Bank 

View of Caracas 
Courtesy Karen Sturges-Vera 



57 



Venezuela: A Country Study 

Venezuelan society as a whole. In addition, the average family of 
four children was overwhelmingly the product of informal unions, 
and many of the children were not recognized by their fathers. In 
fact, in cases where the father left to form another family or disap- 
peared altogether, prevailing social attitudes held that the mother 
should support the child herself, perhaps with some assistance from 
her own family. 

The Venezuelan Children's Council (Consejo Venezolano para 
los Ninos — CVN) was the government agency in charge of pro- 
tecting the welfare of minors, but it seldom instituted judicial 
proceedings to compel fathers to support their children. In accord 
with the Hispanic tradition of maternal responsibility for rearing 
children, mothers were reluctant to complain to the CVN, and the 
council itself had few means, and perhaps even less will, to seek 
out those fathers who had left the household and who no longer 
demonstrated a sense of obligation to their children. The sprawl- 
ing capital, with its labyrinth of nearly one thousand separate bar- 
rios, served as an effective haven for such individuals. 

Social Structure 

Before the oil era began in the mid- 1920s, about 70 percent of 
the Venezuelan population was rural, illiterate, and poor. Over 
the next fifty years, the ratios were reversed so that over 80 per- 
cent of the population was urban and literate. No group has es- 
caped the impact of this modernization process. Even the most 
isolated peasants and tribal Indians felt some effects of this eco- 
nomic growth, which opened up access to elite status; expanded 
opportunities for large numbers of immigrants; increased the size, 
power, and cohesiveness of the middle class; and created a sector 
of organized workers within the lower class. 

The Elite 

Although the traditional gap between rich and poor persisted 
in democratic Venezuela, the modern upper class was by no means 
homogeneous. Traditional society — rural, rigid, deeply stratified — 
changed rapidly during the course of the twentieth century. Perhaps 
ironically, the man most responsible for giving impetus to this 
change was the semiliterate dictator Juan Vicente Gomez. The pri- 
mary catalyst of the social change that began under his dictator- 
ship was economic, and it stemmed not from the established source 
of land controlled by powerful hacendados, but from the subsoil 
in the form of petroleum extracted and marketed through the efforts 
of technicians and technocrats. Gomez, by permitting and encourag- 
ing oil exploration, laid the basis for the emergence of an urbanized, 



58 



The Society and Its Environment 

prosperous, and comparatively powerful Venezuela from the chrysa- 
lis of a traditionally rural, agricultural, and isolated society. 

The trends away from traditional society accelerated after 1945, 
particularly during the decade of dictatorship from 1948 to 1958 
and under the post- 1958 democratic regime, which is often described 
as the reign of the middle class. Despite the vast social and eco- 
nomic changes that took place, however, the economic elite re- 
mained a small group separated both economically and socially from 
the rest of society by an enormous income gap and by a whiter 
and more Hispanicized ethnic makeup. 

In general, those who considered themselves the Venezuelan elite, 
and were thus considered by their fellow citizens, thought of them- 
selves as the upholders of superior values. Most claimed at least 
one postsecondary degree, possibly with a further specialization 
abroad. Concentrated in business and the professions, the Venezue- 
lan upper class tended to disdain manual work and to patronize 
(in both senses of the word) members of the lower classes. In this 
particular respect, Venezuela was one of the very few countries 
in Latin America where a number of elite- supported scholarly and 
community welfare foundations provided support for an imagina- 
tive variety of programs and scholarships. These foundations often 
carried the names of elite families who prided themselves on their 
sense of civic duty. 

The members of the elite also tended to emphasize publicly their 
devotion to the Roman Catholic Church and faith and to display 
a more stable family life than did the rest of the society. That is, 
although divorce did occur in this class, children were usually born 
within a legally constituted family union. Many of the younger 
women managed to combine profession and family, often with the 
help of servants and members of the extended family. 

Perhaps surprisingly to those who visit or observe Venezuelan 
society for the first time, the elite is not a closed and static group. 
Prominent politicians, even those from humble backgrounds, could 
easily marry into the elite. Successful professionals could also move 
up and find acceptance among the upper class. This relative open- 
ness of the elite may serve to mitigate to some extent the extremes 
that persist, particularly in economic terms, between the Venezuelan 
rich and those considered "marginal." 

The Middle Class 

Most accounts describe the Venezuelan middle class as the coun- 
try 's most dynamic and heterogeneous class in terms of social and 
racial origins, and as the greatest comparative beneficiary of the 
process of economic development. Consisting of small businessmen, 



59 



Venezuela: A Country Study 

industrialists, teachers, government workers, professionals, and 
managerial and technical personnel, this class was almost entirely 
urban. Some professions, such as teaching and government ser- 
vice, were traditionally associated with middle-class status, whereas 
newer technical professions have expanded the options and en- 
hanced mobility within this class. Improved educational and job 
opportunities since the establishment of democratic government 
in 1958 have enabled more women to enter the labor force, thus 
either helping themselves and/or their families to attain middle- 
class status. Not surprisingly, those who passed from the lower to 
the middle class in Venezuela often attributed their changed sta- 
tus to their education, and, accordingly, many struggled to send 
their children to private schools so that they could move still far- 
ther up the social ladder. 

A few members of the middle class moved into the elite ranks 
through successful business deals or by marriage. It should be noted, 
however, that class antagonism in Venezuela has been tempered 
somewhat as a result of the special efforts made by political parties 
to appeal to and to co-opt middle-class voters. As a result, the 
Venezuelan middle class had reason to feel much more politically 
empowered and significant than did similar groups elsewhere in 
Latin America. Besides the political parties, active participation 
in a variety of social groups and organizations further strength- 
ened the commitment of this particular middle class to the overall 
sociopolitical system. 

Constitutional provisions have helped both the middle and the 
poorer classes fulfill their aspirations in terms of greater personal 
freedom, expanded economic opportunities, and greater individual 
involvement in government. At the core of the 1961 constitution 
is a commitment to social justice; this commitment, in turn, has 
led to the creation and funding of government agencies designed 
to provide to the middle class and to the poor many services that 
had traditionally been reserved to the wealthy prior to the 1958 
coup. The implementation of many social justice goals is all the 
more remarkable because it occurred not only during Democratic 
Action (Accion Democratica — AD) governments, which, by defini- 
tion, were center-left, but also under Social Christian Party (Co- 
mite de Organizacion Polftica Electoral Independiente — COPEI) 
administrations, which were more center-right in the Venezuelan 
spectrum. 

A short list of government agencies devoted to the implementa- 
tion of social justice goals sketched in the 1961 constitution would 
include the Ministry of Health and Social Welfare, which provided 
free medical care, retirement benefits, and pensions to the disabled; 



60 



The Society and Its Environment 



and the Ministry of Education, which supervised a vast array of 
goals and programs intended to bring literacy, technical, and profes- 
sional training to all Venezuelans (see Social Welfare, this ch.). 
The Venezuelan presidency itself offered a striking illustration of 
the impact of these social justice goals. Since 1958 all presidents 
have come from the middle class, and in some cases they could 
claim, with reason, that they had surmounted rather lowly be- 
ginnings. 

The Peasants 

In the early 1990s, the majority of peasants were wage laborers, 
sharecroppers, or squatters on private or state-owned lands, and 
their meager income placed them at the outer margins of Venezue- 
la' s general prosperity. Rural life has changed little since colonial 
times, in spite of concerted efforts by governments committed to 
agrarian reform. The best land still belonged to a relatively few 
owners, many of them absentees, while the dwindling rural popu- 
lation eked out a miserable subsistence on inadequate tracts of less- 
than-prime farmland. Even the agrarian reform, which had dis- 
tributed millions of hectares of land since 1960, had not as of 1990 
gone on to the essential next step of providing the peasants legal 
title to their parcels (see Land Policies, ch. 3). 

Regional variations in settlement patterns reflected geographic 
conditions, land-use practices, and historical traditions. In the north- 
ern mountain region, the heart of Spanish colonial influence, most 
peasants lived in small, dense settlements. In areas where wage 
laborers or sharecroppers still worked on large plantations, work- 
ers lived in small, centrally located clusters of houses. In the forests 
of the Orinoco plains, the pattern was usually one of isolated farms 
and cattle ranches. 

Although most peasants were poor, there were gradations de- 
termined by such variables as land ownership or job security on 
a plantation or a ranch. The poorest peasants migrated from farm 
to farm or from crop to crop. In strict economic terms, the small 
number of tribal Indians represented the poorest group in Venezue- 
lan society; this characterization, however, was misleading because 
Indian communities have never been fully integrated into the na- 
tion's economy, and therefore the concepts of individual earnings 
or the use of currency were foreign to their way of life. 

For centuries, Venezuelan peasants supported rebel leaders in 
return for promises of reform. At the time of independence, they 
were much closer to their own Jose Antonio Paez than to the aristo- 
cratic Bolivar. Since 1958 many have joined the peasant leagues 
affiliated with the AD and have become much more influential in 



61 



Venezuela: A Country Study 

political terms. Nevertheless, peasants continued to migrate in mas- 
sive numbers to the cities to escape their poor rural conditions. 

The Workers and the Urban Lower Class 

Massive rural-to-urban migration has resulted in the emergence 
of a burgeoning urban lower class, the most successful members 
of which have become urban workers. In the Venezuelan social 
view, the lower class consisted of those in low-status occupations 
(usually manual), the illiterate, and recent immigrants from the 
countryside. For many, the transition was traumatic and stress- 
ful, as epitomized by the presence of innumerable abandoned chil- 
dren in the streets of the capital city. Nonetheless, several studies 
indicated that most migrants felt that they had made the right move 
in spite of the hardships and disappointments. Most were confi- 
dent that the urban environment would help ensure greater 
prosperity and opportunity for their children. 

The urban lower class has not been ignored politically. Political 
parties made concerted efforts to enlist urban workers into their 
affiliated unions, and the government has also attempted to "nor- 
malize" squatter settlements by providing legal title, utilities, and 
other services. Nevertheless, the 1989 food riots that shook Cara- 
cas and left an estimated 300 dead demonstrated that many of the 
urban poor deeply resented the sociopolitical system in spite of 
numerous partisan and government efforts on their behalf (see 
Threats to Internal Security, ch. 5). 

The inroads made among the urban poor class by Protestant 
evangelical and charismatic sects provided another manifestation 
of this sense of alienation. Perhaps sensing that its traditional hold 
was being challenged, the Roman Catholic Church renewed ef- 
forts during the 1980s to reach out to this group of Venezuelans. 
Church- sponsored neighborhood organizations, whether Catho- 
lic or Protestant, tried to respond to the slum dwellers' immediate 
needs, such as gaining title to their ranchos. The churches also sought 
to improve the future opportunities for the children of the lower 
class. For many migrants, the expectation of greater opportuni- 
ties for children was the major reason for coming to the city in the 
first place. Slum dwellers also benefited to a limited extent from 
programs sponsored by political parties. Despite the hardships 
imposed by poverty and the alienation produced by a consumer 
culture, Venezuelan slums were surprisingly stable. These com- 
munities were socially and politically integrated into the local and 
national systems, and their inhabitants generally perceived even 
the mean circumstances of urban slum life as representing improve- 
ments over their previous living conditions. 



62 



The Society and Its Environment 



Ethnic Groups 

Venezuelan society by the twentieth century was an amalgam of 
three races; numerically, the country was primarily mestizo (mixed 
race). Although ethnic background served as an important criterion 
of status in colonial times, it became less so as genetic mixing in- 
volving various combinations of white, black, and Indian made 
distinguishing among racial types increasingly difficult. Eventual- 
ly, ethnic categories came to be regarded as points along a con- 
tinuum rather than as distinct categories, and physical appearance 
and skin color — instead of ethnic group per se — became major 
criteria for determining status. No national census has classified 
Venezuelans according to ethnicity since 1926, so that characteri- 
zations of the national composition are only rough estimates. A 
credible break-down through 1990 would be 68 percent mestizo, 
which in Venezuela signified a mixture of any of the other 
categories; 21 percent unmixed Caucasian; 10 percent black; and 
1 percent Indian. 

Even during the colonial period, native Venezuelan Indians were 
neither as numerous nor as advanced as their counterparts in Mex- 
ico and Peru. Different tribes with varying cultures and languages 
occupied portions of the territory. The more advanced groups were 
ruled by a single chief and supported a priesthood to serve the local 
temples, whereas the more primitive lived as wandering hunters 
and gatherers or as seminomadic slash-and-burn farmers. The 
Spanish conquest, either directly or indirectly, resulted in the deci- 
mation of many indigenous groups. Many perished from diseases 
against which they had no immunity; others died of famine or the 
harsh conditions of enslavement. The nomadic tropical forest In- 
dians were less affected by the Spaniards than were those Indians 
who occupied a defined territory. Most of the nomadic groups sim- 
ply moved to less accessible areas. Even they, however, lost many 
of their number to diseases brought by Europeans, diseases that 
were airborne or waterborne and therefore did not require direct 
contact to spread infection. By the end of the first century of Spanish 
rule, some twenty tribes out of forty or fifty had become extinct. 

Also during the colonial period, racial mixture proceeded apace. 
The earliest conquerors brought no Spanish women with them, 
and many formed common-law relationships with Indian women. 
It was not uncommon for the offspring of these unions to be recog- 
nized and legitimated by the fathers. 

African slavery was instituted in Venezuela to meet the grow- 
ing labor demands of an emerging agricultural economy. Many 
of the slaves came to Venezuela not directly from Africa, but from 



63 



Venezuela: A Country Study 

other colonies, especially the Antilles (West Indies). Again, racial 
mixture was common. The offspring of master and slave often was 
freed and might even have received some education and been named 
a beneficiary in the father's will. 

As a result of these racial mixtures, Venezuelan society from its 
very beginnings displayed a more homogeneous ethnic makeup than 
most other Latin American colonies. The large group of freedmen 
worked mostly as manual laborers in the emerging cities or lived 
as peasants on small plots of land. Blacks and mestizos occupied 
the rungs below Spaniards on the social ladder, but they still en- 
joyed a number of rights and guarantees provided by Spanish law 
and customs. 

This rather fluid ethnic situation, however, did not equate to 
a free and open society. Until the latter half of the twentieth cen- 
tury, Venezuelan social structure was quite rigidly organized along 
class and racial lines. A small number of more or less pure-blooded, 
unmixed Caucasians occupied the top rung of the social ladder by 
virtue of their status as landlords and as self-styled inheritors of 
Hispanic mores and customs. This heritage stressed the importance 
of the patriarchal extended family, the primacy accorded individual 
uniqueness and dignity, disdain for manual labor, and a sharp dis- 
tinction between the roles of men and women. In the traditional 
society, the lower class was rural, with the majority of its mem- 
bers poor peasants, usually of pure or mixed Indian or black de- 
scent. A small middle class, made up of less successful whites and 
some mestizos, lived mainly in the cities and towns. 

By the early eighteenth century, the outlines and bases of the 
social system had been drawn. Most Indians and a growing num- 
ber of blacks were losing their ethnic and cultural identities through 
the processes of racial mixture and societal pressure to conform 
to Hispanic norms. New generations began to see themselves as 
Venezuelans, distinct from Colombians, with whom they were as- 
sociated through colonial administrative structures, or from the 
dwindling numbers of isolated forest Indians. The criollos, Venezue- 
lan but of direct Spanish descent, formed the leadership cadre of 
a new national system. The growth of nationalism, however, did 
not subsume or overcome regional differences. In fact, the devo- 
tion to region was often far stronger than devotion to country, a 
factor that in many ways explains the protracted nature of the war 
of independence. In addition, both Indians and blacks during this 
period had reason to feel that they were better protected by the 
Spanish crown than might be the case under a regime ruled by 
haughty criollos (see The Epic of Independence, ch. 1). 



64 




65 



Venezuela: A Country Study 

After independence the society changed little; a small, privileged, 
criollo elite upper class still held sway over a small middle class 
and a large lower class. The internal wars among competing caudi- 
llos during the second half of the nineteenth century served as a 
leveler to some extent. By the turn of the century, even though 
Venezuela was still a very traditional society, the upper levels had 
been breached to the point where a semiliterate peasant caudillo 
such as Gomez could rise to the very top of the political ladder and 
rule for nearly three decades (see A Century of Caudillismo, ch. 1). 

Given the relative fluidity of Venezuelan society in ethnic terms, 
few groups have stayed isolated and 4 'pure." Among these were 
a few settlements of coastal blacks that retained more of their Afri- 
can and West Indian identity than did the vast majority of dark 
mestizos in many other areas of Venezuelan society, particularly 
in such cosmopolitan cities as Caracas. Other isolated groups in- 
cluded the tribal Indians, particularly in the Amazon area. A more 
visible but still distinct group was that of the Guajiro Indians, who 
could be found mainly in part of the area around Maracaibo, on 
the Peninsula de la Guajira, and on the Colombian border. 

The Guajiro, pastoral nomads who range freely across the 
Venezuelan-Colombian border region, represented probably the 
best known and largest tribe of Indians remaining in the country. 
Owing to their pastoral life, most of the Guajiro lived in temporary 
villages, often in shelters that were litde more than lean-tos. Guajiro 
society is organized into matrilineal clans, headed by chieftains who 
inherit their office through the maternal line. The social organiza- 
tion is based on a division of society into classes of nobles and com- 
moners. 

Although the Guajiro' s style of dress and customs separated them 
sharply from the larger Venezuelan society, they had adopted many 
criollo traits and adapted fairly well to a money economy. Most 
professed at least nominal Roman Catholicism and spoke Span- 
ish. Intermarriage with non-Guajiros also was not uncommon. In 
this respect, the Guajiro reflected the changes in twentieth- century 
Venezuelan society as a whole as they adapted to a process of mod- 
ernization driven by the nation's oil wealth. 

Modernization, Social Values, and Religion 

Venezuelan society of the late twentieth century was clearly in 
transition. After centuries of isolation as a rural backwater in Latin 
America, Venezuela has become a respected voice in world coun- 
cils because of its oil riches. Most of its population has moved to 
the cities, and well-to-do Venezuelans have traveled around the 
world in search of recreation and diversion. Economic growth, 



66 



The Society and Its Environment 



urbanization, industrialization, improved education, and expanded 
opportunities for women have changed the nation's character dra- 
matically. Improved transportation, widespread radio and televi- 
sion access, the availability of numerous national newspapers, and 
the delivery of government services even in remote areas combined 
to make regionalism largely a thing of the past. Caracas was greatly 
influenced by developments in Miami and other foreign commer- 
cial and cultural centers; the rest of the country, in turn, felt the 
reverberations of the capital's growth and change. 

The rapid pace of change has had a tremendous impact in such 
areas as the emerging role of women in Venezuela. Women have 
occupied positions in the cabinet and have held prominent jobs in 
the political parties and in labor unions. More than a dozen wom- 
en representatives have served in the Chamber of Deputies. A num- 
ber of women have also held top positions in private enterprises. 
Approximately as many women as men attended postsecondary 
institutions; in some departments, women outnumbered their male 
counterparts. 

For the middle-class woman who wanted to combine job and 
family, support continued to be provided by the extended family 
and the availability of maids, who often were recent migrants from 
the Andean region or from Colombia. As the extended family 
progressively shrank and the traditional pool of poor and unedu- 
cated women grew progressively smaller, however, Venezuelan 
professional women had begun clamoring for day-care facilities. 
As of 1990, more progressive and larger firms were beginning to 
provide such facilities, but the main push was for the provision 
of these services by the government. Meanwhile, an active feminist 
movement was particularly strong in the capital and the major ci- 
ties, and women's studies were beginning to make their appear- 
ance among the university offerings. 

Some social observers claimed that the rapid change in wom- 
en's roles was attributable, at least in part, to the traditional weak- 
ness of the Venezuelan Roman Catholic Church when compared, 
for example, with the church in neighboring Colombia. Some 90 
percent of Venezuelans were baptized in the Roman Catholic faith, 
but most had little regular contact with the church. The number 
of Protestants continued to grow, mainly as a result of the tremen- 
dously successful proselytizing efforts among shantytown dwellers 
by charismatic and evangelical sects, and had reached about 5 per- 
cent of the population in the 1990s. A Jewish population of sever- 
al thousand was concentrated in the major cities, especially in 
Caracas and Maracaibo. A minuscule number of Indians, partic- 
ularly in the Amazon area, continued to practice their traditional 



67 



Venezuela: A Country Study 

religions, but many had adopted Roman Catholicism. This was 
particularly true among the Guajiro near Maracaibo and on the 
Colombian border. A few other religions were represented in very 
small numbers. Religious freedom is guaranteed by the nation's 
1961 constitution. 

Relations between the Roman Catholic Church and the Venezue- 
lan state have been harmonious throughout most of the twentieth 
century. They continued to be peaceful even after the 1958 coup 
d'etat against Perez Jimenez, in spite of the fact that the church 
had supported the dictator in his early years as president. Rela- 
tions between the church and AD were somewhat strained during 
the trienio (see Glossary), mainly because the church felt threatened 
by some of the AD government's liberal reforms. As the corrup- 
tion of the Perez Jimenez regime became increasingly apparent, 
however, the church began to disassociate itself from his rule and 
to support a return to democracy (see The Transition to Democratic 
Rule, ch. 1). 

Although there is no official state church, the Roman Catholic 
Church enjoyed close ties to the government and could be perceived 
as a national church. COPEI, the second largest political party, 
was originally organized by Roman Catholic lay leaders, even 
though it has since broadened its appeal to Venezuelans of all reli- 
gious persuasions. 

The Venezuelan church was not well endowed economically. It 
owned little property and received only limited private contribu- 
tions. The government contributed a large part of the church's oper- 
ating expenses through a special division of the Ministry of Justice. 
Government funds generally covered the salaries of the hierarchy, 
certain lesser functionaries attached to the more important episco- 
pates, a limited number of priests, and the missionaries to the In- 
dians. In addition, government contributions sometimes paid for 
religious materials, for construction and repair of religious build- 
ings, and for other projects submitted by bishops and archbishops 
and approved by the ministry. 

Attitudes toward the church varied with education and social 
class, but it was generally viewed as a traditional institution in- 
volved more in ritual than in day-to-day contact with its members. 
Venezuelans generally practiced a form of Roman Catholicism that 
adhered loosely to church doctrine but was often deeply emotional 
in its manifestations. Religious laxity was widespread, as was a 
low level of general knowledge of the basic tenets of the faith. During 
the latter half of the twentieth century, Venezuela has become a 
much more secular and materialistic society, less committed to the 
traditional social primacy of the church. 



68 



The Society and Its Environment 



In all social classes, religion was regarded as the proper sphere 
of women. Generally more conscientious in religious practice, wom- 
en were expected to assume the duty of providing the religious and 
moral education of children. For girls, early religious and moral 
training was followed by close supervision in accordance with the 
socially protected status of women. Boys, however, were not en- 
couraged to pursue the priesthood, and Venezuela historically has 
had a very low percentage of religious vocations. As a result, most 
of its clergy were foreign born. 

Adherence to traditional Roman Catholic beliefs was stronger 
in the rural areas, especially in the Andean states, than in the ur- 
ban centers. Many of the original leaders of COPEI came from 
the Andean states. Massive internal migration to the cities, however, 
had lessened considerably the influence of these old strongholds 
of Roman Catholicism at the national level. 

Traditionally, one of the most significant and important areas 
of church involvement in society was education. Roman Catholic 
schools historically have educated the children of the middle and 
upper classes. Because many schools were supported only by tui- 
tion fees, their costs were prohibitive for lower-class groups. Spurred 
by the social encyclicals issued from Rome in the 1960s and 
challenged by the proselytizing of Protestant groups, the church's 
hierarchy has sought to establish greater control over the schools, 
to admit greater numbers of scholarship students, and to increase 
the number of schools charging little or no tuition. As a result, by 
the middle of the 1970s an estimated two-thirds or more of Ro- 
man Catholic schools and colleges were free or partly free. 

The church has always felt a special obligation to help educate 
and Christianize the Indians. In the 1920s and 1930s, the govern- 
ment entered into a series of agreements with the church that as- 
signed the regions of the upper Orinoco, the western Zulia, the 
Carom, and the Tucupita rivers to the Capuchin, Dominican, and 
Salesian religious orders. Educational work has been carried out 
in conjunction with the plans of the Indian Commission of the 
Ministry of Justice. 

Although Venezuelan culture was a mixture of Hispanic, Indi- 
an, and African elements, comparatively rapid integration of large 
segments of the population prevented the syncretic blending of 
animistic and Roman Catholic beliefs so common in other Latin 
American countries. The culturally embracing nature of Venezue- 
lan Catholicism was symbolized in the national patroness, the mes- 
tiza Maria Lionza, a popular figure among Venezuelans of all social 
classes. The cult of Maria Lionza presented a striking synthesis 
of African, Indian, and Christian beliefs and practices. She was 



69 



Venezuela: A Country Study 



worshipped as a goddess of nature and protectress of the virgin 
forests, wild animals, and the mineral wealth in the mountains, 
and certain traits of her character also paralleled those of the Vir- 
gin Mary in Roman Catholic tradition. 

The worship of Maria Lionza was particularly widespread among 
urban dwellers in the shanty towns, many of whom had recently 
migrated to the big cities and felt the need for a blending of Chris- 
tian and traditional indigenous beliefs. At the same time, beliefs 
and practices related to magic and spiritual healing that combined 
Roman Catholic, African, and Indian elements could be found in 
remote rural areas, especially in the Andean states. In keeping with 
the ethnic and cultural background of many coastal communities, 
African elements predominated in their rituals. Traditional Indi- 
an healers still practiced their craft among the remaining tribes. 

Social Welfare 
Education 

In the early colonial era, education by the Roman Catholic Church 
served a minority of wealthy landowners who, though illiterate or 
barely literate, sought schooling for their sons in the manner of Span- 
ish aristocrats. The notion of education for a privileged few reflect- 
ed a rigid, hierarchical social system that distinguished between the 
man of letters and the man who worked with his hands. The dis- 
tinction between manual labor and more ' 'artistic" or creative pur- 
suits became deeply ingrained in the value system and affected the 
educational system as well. The high prestige attached to traditional 
and philosophical studies channeled resources and talent away from 
technical and scientific fields at university levels and produced cur- 
ricula at the primary and intermediate levels that ignored the voca- 
tional needs of most of the population. In an abstract sense, the 
highest ambition was to be a pensador (thinker), a man of ideas, an 
intellectual, rather than an inventor or a tecnico (technician). 

Those who helped shape the struggle for independence and the 
new constitutions of the early nineteenth century were inspired by 
the liberalism of the French and American revolutions. Simon Boli- 
var, who studied in Europe, was gready influenced by the writings 
of Jean-Jacques Rousseau and by the French educational system. 
Such features of Venezuelan education as the degree of centraliza- 
tion, the rigid structure of schools and curricula, and the gaining 
of knowledge through logic are direcdy traceable to French practices. 

The issue of free, public, and compulsory education at the 
primary level first arose during the independence struggle. After 
the initial declaration of independence in 1811, Bolivar issued a 



70 



The Society and Its Environment 

series of decrees concerning free education. But by the time of his 
death in 1830, most of the programs he had proposed had not been 
implemented. However, the ideal of free, universal education had 
become inextricably joined to the name of the national hero, and 
this ideal has since permeated Venezuelan educational policies. 

The real beginning of free public education, however, did not 
come until 1870. Antonio Guzman Blanco issued a decree in which 
he recognized compulsory elementary mass education as the respon- 
sibility of the national, state, and local governments. The Guzman 
regime went on to organize the administration and financing of 
the school system, establishing the Ministry of Public Education 
and the first normal schools for training primary school teachers. 
In 1891 the National University of Zulia in Maracaibo was creat- 
ed, followed in the next year by the National University of Carabobo 
in Valencia. But these ambitious beginnings came to an abrupt 
halt. The National University of Carabobo was closed shortly af- 
ter opening and did not reopen its doors until 1958. The National 
University of Zulia, closed in 1904, did not function again until 
1946. 

The long dictatorship of Juan Vicente Gomez, although gener- 
ally indifferent to education and repressive of student demands, 
did bring about the reestablishment of cordial relations between 
the state and the Roman Catholic Church and encouraged church- 
supported education. Gomez served as a patron to a number of 
intellectuals who were sympathetic to his regime and increased the 
support for the national university in Caracas. 

During the decade after the death of Gomez in 1935, concern 
for teacher training prompted the establishment of a new institute 
for the preparation of intermediate teachers, the National Peda- 
gogic Institute in Caracas. The period also witnessed an expan- 
sion of public schools to rural areas. During the trienio, a number 
of teachers' unions grew up. The Perez Jimenez dictatorship 
(1948-58), however, represented a low point for education. The 
regime constantly interfered with and intermittentiy closed univer- 
sities in response to perceived opposition among students and 
faculty. The budget for education was cut, and the number of stu- 
dents entering and graduating from the universities declined. 

The return of democratic government in 1958 brought leaders 
committed to improving both the quantity and the quality of educa- 
tional opportunities. A number of new universities opened through- 
out the country, agricultural extension services reached out to 
Venezuelan farmers, and imaginative education programs broad- 
cast on radio and television further expanded opportunities for 
learning. In fact, it is generally acknowledged that it was only after 



71 



Venezuela: A Country Study 

1958 that the ideals and goals of Guzman began to be systemati- 
cally pursued. At least six years of primary school were compulsory 
until 1980, when the Organic Law of Education was passed. This 
law provided for compulsory preschool education and nine years 
of basic education, but the implementation of preschool education 
reform has taken longer than originally intended. 

For the upper class, the growing middle class, and those mem- 
bers of the lower class with upward aspirations, an academic edu- 
cation has been indispensable. For this reason, the secondary 
schools, which prepared students for the universities and subse- 
quentiy for white-collar jobs or academic careers, were more popular 
than other intermediate-level schools, such as technical schools or 
training institutes. Despite government efforts to promote voca- 
tional education, university students continued to display a prefer- 
ence for the professions that have always been prestigious and 
popular rather than for the newer technical fields where the need 
was greatest. This preference presented a problem in a country 
that was more industrialized than most in Latin America. In an 
effort to alleviate the problem and to enhance the prestige of a tech- 
nical education, since 1969 the government has facilitated the en- 
try into the university system of students with varied backgrounds, 
including students with a technical education degree. From 1969 
on, the changes injected a high degree of flexibility into the educa- 
tion system. 

At the same time, the social distinction that has always existed 
between private and public schools, particularly at the secondary 
level, has intensified as a result of the expansion of public educa- 
tion. Although the public or official schools often enjoyed better 
financial support and, as a result, newer equipment and more highly 
paid teachers, a private- school education still carried far more pres- 
tige in the minds of many Venezuelans. In light of the cachet be- 
stowed by affiliation with a private school, some teachers split their 
time between the two systems. 

Since the mid-twentieth century, the natural sciences have been 
emphasized in education as international organizations, and pri- 
vate foundations have cooperated with the national government 
in promoting research. The social sciences have been greatly in- 
fluenced by work done in the United States, especially in the area 
of economic development. 

Overall, Venezuela was among the most literate of the Latin 
American countries. The literacy rate among Venezuelans fifteen 
years of age and older was 88.4 percent in 1985. The government 
distributed training materials such as books and tapes throughout 



72 



Fifth- grade classroom, eastern Venezuela 
Courtesy Inter-American Development Bank 
Science Center at the University of the Andes, Merida 
Courtesy Inter -American Development Bank 



73 



Venezuela: A Country Study 

the country in an effort to encourage those who could read and 
write to assist illiterates in acquiring these skills. 

Basic education consisted of nine years of compulsory schooling 
for children six to fourteen years of age. For those continuing their 
education, the system offered two years of diversified academic, 
technical, and vocational study at a senior high school, which could 
be followed by various types of higher education — junior college, 
university, or technical institute. In addition, adults were en- 
couraged to participate in special night classes conducted at all edu- 
cation levels. 

Venezuela's education system, as measured by the number of 
schools, teachers, and size of the enrollment, expanded rapidly in 
the 1970s and 1980s (see table 5, Appendix). Enrollments at all 
levels increased substantially, as did the numbers of schools and 
teachers at each level. Primary enrollments rose by over 30 per- 
cent and secondary by over 50 percent, while university-level en- 
rollments nearly doubled, the latter a reflection not only of 
population growth but also of the opening of new schools and the 
easing of entrance requirements. The best-known and oldest univer- 
sity was the Central University of Venezuela, in Caracas. Many of 
the country's political leaders received their education there, and 
several of the political parties began as student groups on the Cen- 
tral University of Venezuela's campus. To the west, Maracaibo 
was the site of the private Rafael Urdaneta University and the public 
Zulia University. The public University of the Andes was located 
in Merida. Carabobo University in Valencia, Eastern University 
(Universidad de Oriente) in Sucre, and Midwestern University 
(Universidad Centro-Occidental) in Barquisimeto were all public 
universities. 

Shifts in the economy affected Venezuela's technical education 
needs. Until the economic downturn of the 1980s, the shortage of 
skilled workers and managers was a main concern of government 
planners. Skilled personnel were needed to operate what had been 
a burgeoning and technologically sophisticated economy. To fill 
the gap, Venezuela recruited many skilled foreign technicians, ex- 
panded its technical education facilities, and sent Venezuelans 
abroad for training, particularly in the United States and Europe. 
With the economic decline of the 1980s, however, rising unem- 
ployment replaced the continuing lack of technically qualified per- 
sonnel as the primary manpower concern, and the emphasis on 
technical education was reduced (see Labor, ch. 3). 

Health and Social Security 

As in education, Venezuela had, by Latin American standards, 



74 



The Society and Its Environment 



an enviable record in health and social welfare and one that had 
shown tremendous progress. In 1940 the overall life expectancy 
at birth was forty- three years. By 1990 that figure was over seventy 
years: seventy-one years for males and seventy-seven for females, 
both among the highest in Latin America. The death rate was only 
4 per 1 ,000 population, and the average caloric intake was 107 per- 
cent of the minimum level established by the United Nations (UN) 
Food and Agriculture Organization. These indices reflected gener- 
ally improving health conditions, especially since the end of World 
War II, and the increase in preventive public health measures 
undertaken by the government. For example, successful inocula- 
tion programs had lessened the incidence of a number of conta- 
gious diseases. On the other hand, a comparison between the causes 
of death in 1973 and 1981 shows that Venezuela, a rapidly indus- 
trializing country, was also becoming more prone to causes of 
death — heart disease, accidents, and cancer — often associated with 
urban and industrialized countries and a faster pace of life (see ta- 
ble 6, Appendix). Acquired immune deficiency syndrome (AIDS) 
was also a growing problem, particularly for the major cities, such 
as Caracas and Maracaibo, and for tourist centers, such as La 
Guaira and its environs. In 1990 information on the actual inci- 
dence of AIDS in Venezuela was unreliable. 

Infant mortality, pegged at a relatively low 27 deaths per 1 ,000 
live births in 1990, has also been steadily declining, especially in 
the years following World War II. The major causes of these im- 
provements were better public health measures, prenatal care, and 
national immunization campaigns. Overall, health care facilities 
have grown in number and in quality; at the same time, the popu- 
lation has become more urban and better educated. There has also 
been a marked increase in the number of medical facilities and per- 
sonnel offering health care (see table 7, Appendix). The rise in the 
number of nurses reflected government incentives in this field as 
well as the selection of this vocation by a greater number of profes- 
sionally inclined Venezuelan women. 

Medicine has traditionally been a highly respected profession, 
and Venezuelan medical schools turned out adequate numbers of 
well- trained doctors. At the same time, however, relatively few 
nurses received proper training, so that doctors often lacked the 
necessary support system. The availability of care in rural areas 
represented another gap in the health care delivery system. Doc- 
tors tended to concentrate in the large cities, especially Caracas, 
leaving many smaller provincial towns without adequate medical 
personnel. The government has attempted to meet these shortcom- 
ings, with some success, by providing basic medical services through 



75 



Venezuela: A Country Study 

a system of paramedics. On the other hand, shrinking budgets could 
take a toll on health services. In the summer of 1990, President 
Carlos Andres Perez himself showed deep concern over the fact 
that, by government estimates, nearly 46 percent of state- supported 
hospital buildings were in need of repair. 

Private medical facilities, operated for profit, enjoyed greater 
prestige than public institutions. Charitable organizations, espe- 
cially the Roman Catholic Church, operated some health facili- 
ties. The bulk of the population, however, relied on the Venezuelan 
Social Security Institute (Instituto Venezolano de Seguro Social — 
IVSS), which operated its own hospitals, covering its costs out of 
social security funds. At public hospitals, small fees were charged 
to those patients able to meet them, but indigents were treated 
without cost. Services were furnished without charge at public out- 
patient facilities, with a nominal charge for prescription drugs. 
Overall, the medical assistance received by most Venezuelans far 
exceeded that available to the great majority of Latin Americans. 

The Ministry of Health and Social Welfare operated hospitals 
and lesser clinical medical facilities nationwide and coordinated the 
planning of medical services by the states and the Federal District. 
Although attempts have been made to provide a unified health sys- 
tem, as of 1990 such plans had not been implemented. 

Government campaigns for the prevention, elimination, and con- 
trol of major health hazards have been generally successful. 
Venezuela has largely rid itself of malaria; yaws and the plague 
have been brought under control; and Chagas' disease, carried by 
a beetle that attaches itself to straw thatch roofing, has been near- 
ly eliminated. Immunization campaigns have systematically im- 
proved children's health, and regular campaigns to destroy 
disease-bearing insects and to improve water and sanitary facili- 
ties have all boosted Venezuela's health indicators to some of the 
highest levels in Latin America. 

In addition to providing public health care, the IVSS also ad- 
ministered the country's public welfare program. Launched in 1966, 
the IVSS provided old-age and survivor pensions. In addition, it 
sponsored maternity care and medical care for illness, accidents, 
and occupational diseases for workers in both the public and pri- 
vate sectors. Participation in the program was mandatory for all 
wage earners with the exception of temporary and seasonal or part- 
time workers, the self-employed, and members of the armed forces 
(who were covered under a separate system). The availability of 
benefits has been extended progressively to all regions of the country 
so that even farm workers and farmers associated with the agrari- 
an reform program were eligible. 



76 



The Society and Its Environment 



Private charitable and social welfare organizations, which were 
exempt from the income tax, played an important role in support- 
ing and maintaining charity hospitals and organizations, assisting 
persons of limited income, and funding scholarships. Among the 
most active of these organizations was the Voluntary Dividend for 
the Community, founded in 1964 and supported by contributions 
from the business community. It subsidized welfare programs, pri- 
vate education, and community development projects. In this in- 
stance, as in others, Venezuela benefited from the efforts of 
community-minded leaders of the private sector, who bolstered 
government programs and provided further assistance for those in 
greatest need. 

Thus, in the 1990s, Venezuela did not lack for public and pri- 
vate leaders who were deeply concerned about the needs of their 
fellow countrymen. Rather, the looming problem appeared to be 
one that Venezuela had not known for decades, that of scarcity. 
Throughout the 1980s, the state had fewer resources with which 
to respond to the demands of an expanding young population that 
had become accustomed to relying on the public sector for employ- 
ment and social services. For a time, the public was willing to blame 
the new problems of scarcity on the ineptness and, to some extent, 
the corruption of politicians. By the end of the 1980s, however, 
most Venezuelans realized that even a well-intentioned, honest, 
and capable government would have to adjust to the economic real- 
ity of reduced export income and a large external debt. The ap- 
parent upward trend in oil prices heralded by the Iraqi invasion 
of Kuwait in August 1990 represented the one bright spot on the 
economic horizon. Even that, however, was obscured by concerns 
over the general health of the domestic economy, the availability 
of refining capacity for Venezuela's heavy crudes, and other con- 
siderations. 

Despite these economic setbacks, the legitimacy and the viability 
of the Venezuelan democratic society did not seem threatened. Ra- 
cial tension did not divide this largely mestizo society as it did some 
other Latin American societies. Although poor Venezuelans some- 
times demonstrated violently, as in the case of the February 1989 
riots against economic austerity, there was no sentiment outside 
of small extremist groups for a return to an authoritarian govern- 
ment of the right or the establishment of a Cuban-style govern- 
ment of the left. The events of the 1980s, however, shocked 
Venezuelan society; after decades of increasing prosperity and im- 
proving health, education, and economic indices, Venezuelans sud- 
denly found themselves vulnerable to the shifting fortunes of a world 
economy that had always proved beneficent in the past. This 



77 



Venezuela: A Country Study 

"crisis," although more economic than social, should nonetheless 
provide the sternest test yet of Venezuela's commitment to a free, 
tolerant, and socially conscious system. 

* * * 

A major, comprehensive study of Venezuelan society is still to 
be written. Although the literature in English is not voluminous, 
good, but narrow, perspectives can be found in Robert F. Amove' s 
Student Alienation: A Venezuelan Study, G.E.R. Burroughs's Educa- 
tion in Venezuela, Lisa Redfield Peattie's The View from the Barrio, 
and John Duncan Powell's Political Mobilization of the Venezuelan 
Peasant. 

In Spanish, the offerings are much more promising. Among the 
best are Federico Brito Figueroa's La estructura economica de Venezuela 
colonial, Sergio Aranda's Las clases sociales y el estado en Venezuela, 
Maritza Montero's Ideologia, alienacion e identidad nacional, Rafael 
C arias 's ^Quienes somos los venezolanosP, and excellent chapters in An- 
tonio Frances's Venezuela posible. (For further information and com- 
plete citations, see Bibliography.) 



78 



Chapter 3. The Economy 




Street scene with a view of the harbor, Puerto Cabello 



AN UPPER-MIDDLE INCOME, oil-producing country, 
Venezuela enjoyed the highest standard of living in Latin Ameri- 
ca. The country's gross domestic product (GDP — see Glossary) in 
1988 was approximately US$58 billion, or roughly US$3,100 per 
capita. Although the petroleum industry has dominated the 
Venezuelan economy since the 1920s, aluminum, steel, and petro- 
chemicals diversified the economy's industrial base during the 
1980s. Agricultural activity was relatively minor and shrinking, 
whereas services were expanding. 

Venezuela possessed enormous natural resources. The country 
was the world's third largest exporter of oil, the ninth largest 
producer of oil, and accounted for more oil reserves than any other 
nation in the Western Hemisphere. The national petroleum com- 
pany, Venezuelan Petroleum Corporation (Petroleos de Venezuela, 
S.A. — PDVSA), was also the third largest international oil con- 
glomerate. Because of its immense mineral wealth, Venezuela in 
1990 was also poised to become an international leader in the ex- 
port of coal, iron, steel, and aluminum. 

Despite bountiful natural resources and significant advances in 
some economic areas, Venezuela in 1990 continued to suffer from 
the debilitating effects of political patronage, corruption, and poor 
economic management. The country's political and economic struc- 
tures often allowed a small elite to benefit at the expense of the 
masses. As a result, Venezuela's income distribution was uneven, 
and its social indicators were lower than the expected level for a 
country with Venezuela's level of per capita income. Many eco- 
nomic institutions were also weak relative to the country's inter- 
national stature. The efforts of the administration of Carlos Andres 
Perez (president, 1974-79, 1989- ) to reform the economy, espe- 
cially if coupled with political and institutional reforms, would likely 
determine whether the country would reach its extraordinary 
potential. 

Growth and Structure of the Economy 

Spanish expeditionaries arrived in what is present-day Venezuela 
in 1498, but generally neglected the area because of its apparent 
lack of mineral wealth. The Spaniards who remained pursued ru- 
mored deposits of precious metals in the wilderness, raised cattle, 
or worked the pearl beds on the islands off the western end of the 
Peninsula de Paria. Colonial authorities organized the local Indians 



81 



Venezuela: A Country Study 

into an encomienda system (see Glossary) to grow tobacco, cotton, 
indigo, and cocoa. The Spanish crown officially ended the enco- 
mienda system in 1687, and enslaved Africans replaced most Indian 
labor. As a result, Venezuela's colonial economic history, domi- 
nated by a plantation culture, often more closely resembled that 
of a Caribbean island than a South American territory (see Span- 
ish Colonial Life, ch. 1). 

Cocoa, coffee, and independence from Spain dominated the 
Venezuelan economy in the eighteenth and nineteenth centuries. 
Cocoa eclipsed tobacco as the most important crop in the 1700s; 
coffee surpassed cocoa in the 1800s. Although the war of indepen- 
dence devastated the economy in the early nineteenth century, a 
coffee boom in the 1830s made Venezuela the world's third largest 
exporter of coffee. Fluctuations in the international coffee market, 
however, created wide swings in the economy throughout the 1800s. 

The first commercial drilling of oil in 1917 and the oil boom of 
the 1920s brought to a close the coffee era and eventually trans- 
formed the nation from a relatively poor agrarian society into Latin 
America's wealthiest state. By 1928 Venezuela was the world's lead- 
ing exporter of oil and its second in total petroleum production. 
Venezuela remained the world's leading oil exporter until 1970, 
the year of its peak oil production. As early as the 1930s, oil 
represented over 90 percent of total exports, and national debate 
increasingly centered on better working conditions for oil workers 
and increased taxation of the scores of multinational oil compa- 
nies on the shores of Lago de Maracaibo (see fig. 1). In 1936 the 
government embarked on its now-famous policy of sembrar el petroleo, 
or "sowing the oil. " This policy entailed using oil revenues to stimu- 
late agriculture and, later, industry. After years of negotiations, 
in 1943 the government achieved a landmark 50-percent tax on 
the oil profits of the foreign oil companies. Although Venezuela 
reaped greater benefits from its generous oil endowment after 1943, 
widespread corruption and deceit by foreign companies and indif- 
ferent military dictators still flourished to the detriment of eco- 
nomic development. Nevertheless, despite unenlightened policies, 
economic growth in the 1950s was robust because of unprecedent- 
ed world economic growth and a firm demand for oil. As a result, 
physical infrastructure, agriculture, and industry all expanded 
swiftly. 

With the arrival of democracy in 1958, Venezuela's new leaders 
concentrated on the oil industry as the main source of financing 
for their reformist economic and social policies (see The Triumph 
of Democracy, ch. 1). Using oil revenues, the government inter- 
vened significantly in the economy. In 1958 the new government 



82 



The Economy 



founded a new noncabinet ministry, the Central Office of Coordi- 
nation and Planning (Oficina Central de Coordination y Planifica- 
cion — Cordiplan) in the Office of the President. Cordiplan issued 
multiyear plans with broad economic development objectives. The 
government in 1960 embarked on a land reform program in re- 
sponse to peasant land seizures. In 1960 policy makers also began 
to create regional development corporations to encourage more de- 
centralized planning in industry. The first such regional organi- 
zation was the Venezuelan Corporation of Guayana (Corporation 
Venezolana de Guayana — CVG), which eventually oversaw nearly 
all major mining ventures. The year 1960 also marked the coun- 
try's entrance as a founding member into the Organization of the 
Petroleum Exporting Countries (OPEC), which set the stage for 
the economy's rapid expansion in the 1970s. Throughout the 1960s, 
the government addressed general social reform by spending large 
sums of money on education, health, electricity, potable water, and 
other basic projects. Rapid economic growth accompanied these 
reformist policies, and from 1960 to 1973 the country's real per 
capita output increased by 25 percent. 

The quadrupling of crude oil prices in 1973 spawned an oil eu- 
phoria and a spree of public and private consumption unprecedent- 
ed in Venezuelan history. The government spent more money (in 
absolute terms) from 1974 to 1979 than in its entire independent 
history dating back to 1830. Increased public outlays manifested 
themselves most prominently in the expansion of the bureaucra- 
cy. During the 1970s, the government established hundreds of new 
state-owned enterprises and decentralized agencies as the public 
sector assumed the role of primary engine of economic growth. The 
Venezuelan Investment Fund (Fondo de Inversiones de Venezuela — 
FIV), responsible for allocating huge oil revenues to other govern- 
ment entities, served as the hub of these institutions. In addition 
to establishing new enterprises in such areas as mining, petrochem- 
icals, and hydroelectricity, the government purchased previously 
private ones. In 1975 the government nationalized the steel industry; 
nationalization of the oil industry followed in 1976. Many private 
citizens also reaped great wealth from the oil bonanza, and weekend 
shopping trips to Miami typified upper-middle-class life in this period. 

A growing acknowledgment of the unsustainable pace of public 
and private expansion became the focus of the 1978-79 electoral 
campaign. Because of renewed surges in the price of oil from 1978 
to 1982, however, the government of Luis Herrera Campins (presi- 
dent, 1979-84) scrapped plans to downgrade government activi- 
ties, and the spiral of government spending resumed. In 1983, 
however, the price of oil fell, and soaring interest rates caused the 



83 



Venezuela: A Country Study 

national debt to multiply. Oil revenues could no longer support 
the array of government subsidies, price controls, exchange-rate 
losses, and the operations of more than 400 public institutions. 
Widespread corruption and political patronage only exacerbated 
the situation. 

The government of Jaime Lusinchi (president, 1984-89) attempt- 
ed to reverse the 1983 economic crisis through devaluations of the 
currency, a multi-tier exchange-rate system, greater import pro- 
tection, increased attention to agriculture and food self-sufficiency, 
and generous use of producer and consumer subsidies. These 1983 
reforms stimulated a recovery from the negative growth rates of 
1980-81 and the stagnation of 1982 with sustained modest growth 
from 1985 to 1988. By 1989, however, the economy could no longer 
support the high rates of subsidies and the increasing foreign debt 
burden, particularly in light of the nearly 50-percent reduction of 
the price of oil during 1986. 

In 1 989 the second Perez administration launched profound poli- 
cy reforms with the support of structural adjustment loans from 
the International Monetary Fund (IMF — see Glossary) and the 
World Bank (see Glossary). In February 1989, price increases 
directly related to these reforms sparked several days of rioting and 
looting that left hundreds dead in the country's worst violence since 
its return to democracy in 1958 (see Threats to Internal Security, 
ch. 5). Ironically, Perez, who oversaw much of the government's 
expansion beginning in the 1970s, spearheaded the structural re- 
forms of 1989 with the goal of reducing the role of government 
in the economy, orienting economic activities toward the free mar- 
ket, and stimulating foreign investment. The most fundamental 
of the 1989 adjustments, however, was the massive devaluation 
of the bolivar (B; for value of the bolivar — see Glossary) from its 
highly overvalued rate to a market rate. Other related policies 
sought to eliminate budget deficits by 1991 through the sale of scores 
of state-owned enterprises, to restructure the financial sector and 
restore positive real interest rates, to liberalize trade through tariff 
reduction and exchange-rate adjustment, and to abolish most sub- 
sidies and price controls. The government also aggressively pur- 
sued debt reduction schemes with its commercial creditors in an 
effort to lower its enervating foreign debt repayments. 

Economic Policy 
Fiscal Policy 

The government's fiscal accounts generally showed surpluses until 
the mid-1980s because of the immense oil income. In 1986, however, 



84 



The Economy 



the drop in oil prices triggered a fiscal deficit of 4 percent; the deficit 
exceeded 6 percent in 1988. 

The major actors in fiscal policy were Cordiplan, which was 
responsible for long-term economic planning, and the Budget Office 
of the Ministry of Finance, which oversaw expenditures and 
revenues for each fiscal year (FY — see Glossary). Cordiplan also 
oversaw the fiscal status of the FIV, PDVSA, the social security 
system, regional and municipal governments, the foreign exchange 
authority, state-owned enterprises, and other autonomous agen- 
cies. But economic planning and budgeting suffered from a seri- 
ous lack of interagency cooperation, and five-year plans and an- 
nual public-sector investments often lacked cohesiveness. 

Total government spending reached about 23 percent of GDP 
in 1988. Current expenditures accounted for 70 percent of overall 
outlays, compared with 30 percent for capital expenditures. Capi- 
tal investments, after a decline in the mid-1980s, expanded slowly 
during the late 1980s. Interest payments, two-thirds of which ser- 
viced foreign debt, represented 1 1 percent of total expenditures in 
1988, a typical figure for most of the decade. 

The revenue structure in the late 1980s remained excessively de- 
pendent on oil income. In 1988 petroleum revenues, both income 
taxes and royalties, provided 55 percent of total revenue. Although 
oil's contribution to total revenue had declined in the 1980s, most 
economists felt that it had not declined sufficiently. Overall, taxes 
contributed 80 percent of total revenue in 1988, with the remain- 
ing 20 percent derived from such nontax sources as royalties and 
administrative fees. Tax exemptions, deductions, allowances, and 
outright evasion greatiy reduced the effectiveness of fiscal policy. 
Officials planned to inaugurate a value-added tax in 1990 as another 
means to widen the revenue base. 

Monetary and Exchange-Rate Policies 

The Central Bank of Venezuela (Banco Central de Venezuela — 
BCV) performed all typical central bank functions, such as manag- 
ing the money supply, issuing bank notes, and allocating credit. 
As part of the country's overall financial sector reform, the BCV 
embarked in 1989 on numerous revisions of monetary policy aimed 
at improving the bank's control over the money supply. The most 
important policy change was the government's decision to allow 
the interest rate to fluctuate with market rates. Despite its initial 
inflationary effect, the policy created incentives for savings and in- 
vestment, thereby attracting and retaining capital. Deposits swelled 
noticeably during 1989. In 1990, however, the Venezuelan Supreme 



85 



Venezuela: A Country Study 

Court declared that the BCV was legally responsible for setting 
interest rates. The BCV hoped to rescind the law in the early 1990s. 

Venezuela traditionally enjoyed general price stability; inflation 
averaged a mere 3 percent from 1930 to 1970. Annual price in- 
creases did not exceed 25 percent until the mid-1980s. During the 
1970s, many economists credited the FIV with successfully manag- 
ing and investing overseas the country's oil windfalls in a way that 
prevented inordinate price instability. By the 1980s, however, finan- 
cial deterioration, weakening BCV authority, numerous devalua- 
tions, and fiscal deficits had combined to push consumer prices and 
inflation up dramatically in the late 1980s. The average consumer 
price index rose by an unprecedented 85 percent in 1989 (see ta- 
ble 8, Appendix). Some price increases were associated with the 
1989 structural adjustment program, and thus represented what 
some economists refer to as ' ' correctionary inflation," the trade- 
off for eliminating previous distortions in prices. By 1990 only a 
handful of price controls remained in effect. 

The bolivar was traditionally a very stable currency, pegged to 
the United States dollar at a value of B4.29 = US$1 from 1976 to 
1983. The bolivar experienced several devaluations from 1983 to 
1988, when monetary authorities implemented a complicated four- 
tier exchange-rate system that provided special subsidized rates for 
certain priority activities. The multiple exchange-rate system, 
however, proved to be only a stopgap measure, eventually giving 
way to a 150-percent devaluation at the market rate in 1989. The 
1989 devaluation unified all rates from the official B14 = US$1 rate 
to the new B36 = US$1 rate, which was a floating rate subject to 
the supply and demand of the market. By late 1990, the value of 
the bolivar had crept down to B43 = US$1. 

In a related matter, the Currency Exchange Office (Regimen 
de Cambio de Dinero — Recadi), the organization that oversaw the 
various exchange rates, became the focus of one of the largest scan- 
dals in the decade. Between 1983 and 1988, businessmen bribed 
Recadi officials in return for access to half-priced United States 
dollars to funnel an alleged US$8 billion overseas. When the scandal 
broke in 1989, law enforcement agents investigated as many as 
2,800 businesses, and more than 100 executives from leading 
multinational enterprises fled the country in fear of prosecution. 

Labor 

Formal Sector 

Venezuela's official labor force in 1989 stood at 6.7 million. 
The labor force constituted 57 percent of the economically active 



86 



The Economy 



population (those over age fifteen) and 35 percent of the entire 19.7 
million population. Many workers, particularly youth, women, and 
the elderly, were not recorded in official labor data, however (see 
Informal Sector, this ch.). Some 6.12 million workers of the total 
labor force had jobs in 1989, resulting in an unemployment rate 
of 8.7 percent. Unemployment fluctuated based largely on the health 
of the oil industry. In 1978 only 4.3 percent of the official labor 
force was unemployed, compared with the peak level of 14.5 per- 
cent in 1984. 

Services accounted for the greatest portion of the labor force in 
1989 (26 percent), followed by commerce (20 percent), government 
(20 percent), manufacturing (17 percent), and agriculture (13 per- 
cent). Mining and petroleum, the source of most government 
revenue and nearly all exports, employed less than 1 percent of 
the labor force (see fig. 4). 

Female participation in the labor force was increasing, but 
represented only 31 percent of the official work force in 1987. A 
growing cadre of female technicians and laborers worked in heavy 
industries, but women still generally received lower salaries than 
men. 

The typical rural employee earned 25 percent less than his or 
her urban counterpart, and white-collar workers averaged more 
than double the earnings of blue-collar workers. Income distribu- 
tion was highly skewed, in that the wealthiest 20 percent of the 
population owned 45 percent of the country's wealth, whereas the 
poorest 20 percent held only 6 percent of the wealth. 

The Venezuelan government passed a rather comprehensive 
labor law as early as 1936 in response to protracted disputes be- 
tween workers and foreign oil companies. A new labor law in 1974 
further expanded workers' rights, and the country debated a re- 
vised labor law in 1990. The nation's 1990 labor law incorporated 
provisions for organized labor, collective bargaining, generous 
fringe benefits, and retirement and disability pensions. Venezuela 
passed a national minimum wage in 1974. As throughout Latin 
America, however, the Ministry of Labor in Venezuela was gener- 
ally incapable of adequately enforcing the country's labor code. 
Conversely, many employers complained of the difficulty of firing 
a worker after the first three months on the job. 

Over one-quarter of all workers were organized, and labor un- 
ions played a visible role in society (see Interest Groups and Major 
Political Actors, ch. 4). The Confederation of Venezuelan Work- 
ers (Confederation de Trabajadores de Venezuela — CTV), affiliat- 
ed with the Democratic Action (Action Democratica — AD) party, 
represented the majority of organized labor. There were also 



87 



Venezuela: A Country Study 



1989 Labor Force = 6.7 million 




Figure 4. Employment by Sector, 1989 



three smaller labor federations and a handful of independent un- 
ions. The public sector and heavy industry employed the highest 
percentages of organized workers. 

Unlike what was the case in many Latin American countries, 
labor relations in Venezuela were consultative rather than confron- 
tational, and the CTV had good working relations with the major 
business group, the Federation of Chambers and Associations of 
Commerce and Production (Federacion de Camaras y Asociaciones 
de Comercio y Produccion — Fedecamaras) . Strikes were rare, and 
the government typically did not intervene to resolve labor con- 
tract negotiations. Labor's relations with both management and 
the government soured somewhat after the 1986 fall in oil prices, 
however. Unprecedented inflation from 1986 to 1990 quickly eroded 
unionized salaries, further straining these alliances as the country 
sought to find new mechanisms to compensate for the effects of 
inflation. In May 1989, the CTV led a general strike to protest 
the February 1989 adjustment in the value of the bolivar and austeri- 
ty policies, indicating a growing division between the CTV and 
its political affiliate, the AD. 



88 



The Economy 



Informal Sector 

An estimated 2.3 million persons, or 38 percent of all workers, 
operated outside the formal economy in 1988. Although estimates 
varied, the informal sector accounted for between 32 and 40 per- 
cent of the labor force throughout the 1980s. This sector included 
nonprofessional self-employed workers, businesses employing five 
or fewer persons, and domestic workers. So-called informales drove 
taxis, offered door-to-door mechanical services, cleaned homes, sold 
clothing on downtown streets, and worked as day laborers. Youth, 
women, and Colombian indocumentados (undocumented or illegal 
aliens) apparently constituted a disproportionate share of the in- 
formal sector. According to some analysts, the country's large 
underground economy stemmed from the government's excessive 
regulation of the formal economy and the private sector's inabili- 
ty to provide sufficient jobs for the country's burgeoning urban 
populace. 

Agriculture 

Agriculture played a smaller role in the Venezuelan economy 
than in virtually any other Latin American country in the 1980s. 
In 1988 the sector contributed only 5.9 percent of GDP, employed 
13 percent of the labor force, and furnished barely 1 percent of 
total exports (see fig. 5). Agricultural output was focused almost 
entirely on the domestic market. 

The backbone of the national economy for centuries, agricul- 
ture entered a period of steady decline in the early twentieth cen- 
tury as the oil industry eclipsed all other sectors of the economy. 
As late as the 1930s, agriculture still provided 22 percent of GDP 
and occupied 60 percent of the labor force. The industrial develop- 
ment of the nation by the 1940s, however, seemed to have relegat- 
ed agriculture to permanent secondary status. 

Agriculture recorded its worst growth in years in the early 1980s, 
and the decade saw successive programs designed to revive agricul- 
ture in the face of a weakened economy. Government policies 
toward the sector often alternated between deregulation and ex- 
tensive government intervention, with the latter being the more 
typical response. In 1984 the Lusinchi administration confronted 
rural stagnation with a multifaceted program of producer and con- 
sumer subsidies, import protection, and exchange-rate preferences. 
The plan also reduced interest rates on agricultural loans through 
scores of government development finance institutions serving the 
sector. Government decrees also required commercial banks to hold 
at least 22.5 percent of their loan portfolios in agriculture. Farmers 



89 



Venezuela: A Country Study 



GDP 1988 = US$58 billion 

CONSTRUCTION 
4 9% 

AGRICULTURE 




GOVERNMENT AND 
OTHER SERVICES 
(INCLUDING UTILITIES) 
39.7% 



COMMERCE 
19.6% 



Source: Based on information from Economist Intelligence Unit, Country Report: Venezuela, 
Suriname, Netherlands Antilles, No. 3, London, 1989, 2. 

Figure 5. Estimated Gross Domestic Product (GDP) by Sector, 1988 

were exempt from income taxes. These measures paid off hand- 
somely in the short run. During one five-year period of expansion, 
for example, annual growth rates in the agricultural sector reached 
8 percent in 1984 and 1985. The government's program to resus- 
citate the rural economy, however, was extremely costly because 
it entailed high levels of subsidization. 

The Ministry of Agriculture and Livestock (Ministerio de 
Agricultura y Cria — MAC) designed and implemented the nation's 
agriculture policy. The most drastic changes in farm policy in 1990 
occurred through the devaluation of the bolivar, which automati- 
cally eliminated previous preferential rates for certain agricultural 
inputs. Likewise, the Perez government's policy of price deregu- 
lation affected many basic agricultural commodities, and ensuing 
price rises were a factor in the February 1989 riots. As a result 
of government cutbacks in subsidies and price supports, agricul- 
ture registered a 5-percent decline in 1989. 

Land Policies 

Despite agrarian reform efforts beginning in 1960, Venezuela's 



90 



The Economy 



land tenure patterns in 1990 still portrayed the typical Latin Ameri- 
can dichotomy between latifundios and minifundios (small holdings). 
For example, data on land tenancy from agricultural censuses from 
1937 through 1971 pointed to a pattern of land concentration. More 
recent estimates mirrored data from these earlier censuses. One 
estimate in the late 1980s, for example, held that the smallest 42.9 
percent of all farms covered only 1 percent of the arable land, 
whereas the largest 3 percent accounted for as much as 77 percent 
of arable land. 

The country's major land reform program began with an initial 
decree in 1958 after the fall of the dictatorship of Marcos Perez 
Jimenez. The Agrarian Reform Law of 1960 created the National 
Agrarian Institute (Instituto Nacional Agrario — IN A), which sought 
to provide land to those who worked it, initially by transferring 
public lands and later by expropriating private holdings of arable 
land not under cultivation. Although the government invested sub- 
stantial resources in an effort to integrate its rural development 
strategy through the provision of roads, markets, schools, and clin- 
ics, new agricultural colonies rarely had the conveniences of earlier 
farming towns. Accordingly, the land reform experienced a dropout 
rate as high as one-third. Moreover, few of the peasants who stayed 
in the settlements actually obtained legal title to their land, which 
remained in the hands of the state. 

Land reform had made only modest adjustments in Venezue- 
lan land tenure through 1990. By the 1980s, over 200,000 families 
had benefited from the state's distribution of nearly 10 percent of 
the country's total land area. The average size of the country's 
400,000 farming units stood at eighty hectares in 1989, considera- 
bly higher than earlier decades. Improved access to land helped 
expand the country's total land under cultivation and accelerated 
the country's attainment of self-sufficiency in certain crops and 
livestock. On the negative side, however, the benefits of land re- 
form were seriously tainted by the program's high failure rate and 
the fact that as many as 90 percent of participants never gained 
title to their land. Without land titles, farmers lacked collateral to 
obtain financing for needed agricultural inputs. These factors, com- 
bined with the fact that immense private tracts of land remained 
intact, demonstrated the relatively minor impact of land reform. 

Land Use 

Only some 4 percent of Venezuela's total area, or about 3.8 
million hectares, was considered readily arable or already under cul- 
tivation in the late 1980s. Some estimates claimed that as much as 
one-third of the country's total land area was suitable for agriculture. 



91 



Venezuela: A Country Study 

In general, however, Venezuela's vast expanse was better suited 
to forest or pasture than to crops, and much otherwise arable land 
had been relatively neglected because of adverse weather condi- 
tions or lack of access to markets. 

Crops 

Food Crops 

Despite gains in the production of some grains and cereals, ur- 
banization and changing dietary patterns increased Venezuela's 
dependence on imports of basic foods during the 1980s. The migra- 
tion of farmers to urban areas reduced the output of traditional 
food crops such as cassava, potatoes, and other inexpensive tubers; 
higher wheat imports compensated for this decline. The growing 
popularity of wheat products in Venezuela drove imports steadily 
higher because the country's warm climate was not conducive to 
the cultivation of wheat. 

Corn was the country's major domestic food crop. Most of 
Venezuela's corn crop came from the central plains, particularly 
the states of Portuguesa, Barinas, and Guarico. A traditional sta- 
ple, corn surpassed coffee as the nation's leading crop in the 1960s; 
by 1988 farmers cultivated corn on some 642,000 hectares. Total 
production was 1.28 million tons in that year. After declining in 
the 1970s, corn production flourished in the 1980s, largely because 
of the agricultural policies of the mid-1980s that provided import pro- 
tection and stimulated greater food self-sufficiency. Despite the gains 
of corn producers, however, the costs of corn production remained 
relatively high, which indicated that domestic production would be 
vulnerable to the effects of external competition under the market- 
oriented reforms initiated by the government in the early 1990s. 

Sorghum became a major grain in the mid-1970s. A drought- 
resistant crop, it was introduced to Venezuela because it could toler- 
ate the country's unpredictable precipitation pattern. Sorghum, like 
corn, was grown nationwide, and sorghum production enjoyed rapid 
growth during the 1980s. In 1988 sorghum covered some 392,000 
hectares, which yielded approximately 820,000 tons of grain. The 
popularity of sorghum in the 1980s was closely linked with the quick 
expansion of the national pork and poultry industries, which used 
sorghum as their major feed grain. Although domestic production 
increased, however, it could not keep pace with demand. Conse- 
quently, imports of sorghum also climbed throughout the decade. 

Rice was another major grain. Rice production doubled during 
the 1970s, mainly because of the increased use of irrigation. In the 



92 



Unloading harvested corn 
Courtesy Inter-American 
Development Bank 




1980s, however, rice production fell rapidly. Weather variations 
accounted for some fluctuations in production, but the central cause 
of the decline was poor technical expertise in both cultivation and 
irrigation techniques. Rice paddies covered some 1 16,500 hectares 
of land and yielded 383 tons of rice in 1988; at its peak in 1981, 
rice grew on some 243,000 hectares and yielded 681,000 tons. Frus- 
trated by the inadequacy of available technology, many rice farm- 
ers had switched to other crops by the late 1980s. Many of these 
producers had complained about the inadequate levels of credit 
available from the government, as well as the low prices the govern- 
ment paid for their crops. 

Farmers grew rice throughout the country, with the exceptions 
of the extreme west and south. Farmers who cultivated irrigated 
rice, especially those in Portuguesa and Guarico, produced as many 
as 2.5 crops a year, whereas dry rice farmers brought in only one 
crop, during the May through November rainy season. 

Farmers also cultivated a wide variety of tubers, legumes, vegeta- 
bles, fruits, and spices. Principal tuber crops consisted of cassava, 
potatoes, sweet potatoes, and taro. In some areas, peasants milled 
cassava for use as a flour. Legumes included yellow, black, and 
white beans, as well as a local pulse called quinchoncho. Vegetables 
included tomatoes, lettuce, cabbage, carrots, cauliflower, eggplant, 
cucumber, beets, and peas. The more moderate regions of Vene- 
zuela were also suitable for a wide variety of fruits. Depending on 



93 



Venezuela: A Country Study 

the seasonal crop, the country exported small amounts of tropical 
fruits. 

Cash Crops 

Cocoa and coffee provided most of Venezuela's export revenues 
before they entered a period of prolonged decline in the 1900s. 
Jesuits introduced coffee in the 1740s, and by the 1800s Venezue- 
la was the world's third largest coffee producer. By the 1980s, 
however, the coffee industry was in a decline. In 1988 coffee trees 
occupied 273,200 hectares and produced only 71,000 tons of coffee, 
one of the lowest yields in the world. The value of coffee exports, 
mainly to the United States and Europe, was about US$24 mil- 
lion in 1988. Coffee was primarily a peasant crop, grown largely 
on farms of under twenty hectares in mountainous areas. Low 
profits prevented most farmers from taking steps, such as the plant- 
ing of newer coffee bushes, that could improve yields. Worse still, 
Venezuelan coffee in the 1990s faced the impending introduction 
of plant diseases from the neighboring coffee crops of Colombia 
and Brazil. 

Cocoa was also characterized by extremely low yields, in part 
as a result of aged trees and general deterioration in the crop. Once 
Venezuela's leading cash crop, by 1988 cacao plants covered only 
about 59,000 hectares and yielded a mere 13,500 tons of cocoa beans. 
As with coffee, most farmers sold their cocoa through government 
marketing boards for use domestically and internationally. Exports 
of cocoa beans and products exceeded US$17 million in 1988, rank- 
ing cocoa as the third leading agricultural export (after coffee and 
tobacco), mainly to Belgium, the United States, and Japan. 

Tobacco appeared to be one of the country's few dynamic cash 
crops in the late 1980s. Although tobacco generally stagnated in 
the 1970s and early 1980s, output expanded notably in the late 1980s 
as the industry turned to export markets in the Caribbean. In 1988 
farmers in the west-central plains planted about 9,100 hectares of 
both dark and light tobacco, producing about 15,300 tons of leaf. 
In 1988 the cigarette industry exported upwards of US$20 million 
of cigarettes to the Caribbean, ranking tobacco as the second largest 
export crop. 

Other leading cash crops included sugarcane, oilseeds, and cot- 
ton. Once a net exporter of sugar, Venezuela by the mid-1970s 
became a net importer, and in 1988 the country was only 71 per- 
cent self-sufficient in sugar. Sugarcane grew on 117,000 hectares 
in 1988 and produced 8.33 million tons of raw sugar, but annual 
output fluctuated according to weather conditions, management 
practices, price changes, and currency devaluations. Many farmers 



94 



The Economy 



plowed under their cane fields in the 1980s in order to plant more 
lucrative crops, and the nation's sixteen sugar mills faced ongoing 
technical obstacles. 

Oilseeds, such as sesame, sunflower, coconut, peanut, and cot- 
ton, faced a fate similar to other cash crops, and in 1988 the na- 
tion was only 21 percent self-sufficient in edible oils. Although 
Venezuela was once one of the world's leading producers of sesame 
oil, the industry declined as a result of a deterioration of the genetic 
content of the country's sesame plants and low market prices. Ses- 
ame plants, however, still extended over 148,700 hectares and yield- 
ed 68,300 tons in 1988. By the 1980s, Venezuela imported large 
amounts of soybean oil. 

Livestock 

The country's livestock industries accounted for nearly a third 
of all output in the agricultural sector and met the nation's basic 
meat consumption needs. The pork and poultry industries fared 
well during the 1980s, but the beef and dairy industries struggled. 
The cattle industry, a mainstay of Venezuela's central plains for 
centuries, failed to modernize along with the pork and poultry in- 
dustries during the 1970s and 1980s. The low prices paid by the 
government, combined with producer export taxes, hurt cattle 
ranchers, who did not export for several years during the 1980s. 
Both cattle ranchers and dairy farmers were unable to maximize 
production. The government sought to intervene in the case of the 
dairy industry, providing various levels of subsidies, especially for 
consumers. These policies proved unsuccessful, however, and did 
more to promote corruption in milk distribution than efficiency 
in production. By 1990 the country was only 40 percent self- 
sufficient in milk. Many of the subsidies were likely targets of 
market-oriented reforms in the early 1990s. 

The poultry and pork industries succeeded in bringing more 
modern production techniques to Venezuela beginning in the 1970s. 
Some 2.5 million pigs were slaughtered in 1988, up from 1.7 mil- 
lion in 1980. The poultry industry also increased production, from 
156 million broilers in 1980 to 251 million in 1988. The country 
exported modest amounts of poultry in the mid-1980s. Both the 
pork and poultry industries, however, faced increased costs after 
1989 as a result of the exchange-rate liberalization that raised the 
cost of imported feeds. 

Farming Technology 

Venezuelan farmers' use of purchased inputs — such as fertiliz- 
ers, tractors, and irrigation water — to increase their productivity 



95 



Venezuela: A Country Study 



remained closely tied to government promotional policies. For ex- 
ample, Venezuelan farmers enjoyed generous subsidies for the pur- 
chase of domestically produced fertilizers after 1958. As a result, 
fertilizer use increased greatly. From 1980 to 1986, the applica- 
tion of fertilizers more than doubled, from 64 to 141 kilograms per 
hectare. In 1989 the Perez administration reduced fertilizer subsi- 
dies from 90 percent to 30 percent. This action had little effect on 
agricultural production because fertilizer usage already exceeded 
optimum levels in many areas. 

In 1989 MAC administered twenty-four irrigation projects that 
covered 261,600 hectares. Only 40 percent of this irrigated area, 
however, actually received water from irrigation projects. Poor 
management and inadequate maintenance of the irrigation systems 
prevented the remainder of the land from reaching its full poten- 
tial. Nonetheless, irrigation projects enabled the country to improve 
its productivity and self-sufficiency in some crops, most notably rice. 

Credit and agricultural extension services were two other tools 
employed by the government to improve farming practices. Suc- 
cessive governments, beginning in the 1960s, established scores of 
development finance institutions exclusively for agriculture (see 
Banking and Financial Services, this ch.). In the 1980s, dozens 
of such lenders provided finance for agriculture at widely varying 
rates depending on the loan, the product involved, and the type 
of institution from which it originated. Commercial banks also held 
extensive agricultural portfolios as government laws required that 
22.5 percent of all credit be allocated to that sector. In addition, 
bankers and other government finance institutions lent to farmers 
and ranchers at a rate as low as one-third of the prevailing com- 
mercial rate. By contrast, government agricultural extension ef- 
forts were less aggressive. The country's extremely low yields in 
many crops and livestock were attributable, in part, to the inade- 
quacy of extension services. MAC's National Agricultural and 
Livestock Research Fund (Fondo Nacional de Investigaciones 
Agropecuarios) performed research and provided some minimal 
extension services for farmers. Universities and institutes, such as 
the Simon Bolivar United World Agriculture Institute in Caracas, 
also contributed to agricultural and environmental research. More 
typically, farmers obtained technical assistance from producer as- 
sociations to which they belonged. 

Fishing and Forestry 

The fishing subsector as a whole provided over one-tenth of the 
total output of the agricultural sector by the late 1980s. For a country 
with a 2,800-kilometer coastline, a shallow continental shelf of some 



96 



The Economy 



9,000 square kilometers, and a network of more than 1 ,000 rivers, 
Venezuela was slow to exploit its coastal and inland waterway 
resources. It was not until the mid-1980s that a minor fishing boom 
took place. In 1975 the government established a National Fishing 
Enterprise to upgrade the traditionally undercapitalized fishing 
industry. During this period, the growth of domestic shipbuilding 
and a general industrial expansion benefited fishermen. From 1983 
to 1988, the catch of the nation's anglers grew by 54 percent, reach- 
ing 354, 185 tons. A 300-percent increase in the tuna catch ranked 
Venezuela as the world's fourth largest producer. Most tuna, 
however, was sold at sea and did not reach local markets, where 
meat was still the dietary preference. By contrast, river fishing re- 
mained underdeveloped. 

Forests covered an estimated 34 percent of Venezuela's land area. 
During the 1980s, the timber industry modernized and consolidated; 
from a collection of small saw mills, it developed into several large 
integrated wood pulp and newsprint plants, especially in the Ciudad 
Guayana region. Joint ventures with foreign companies sought to 
harvest several hardwood species for wood products and chemical 
derivatives. The government's forest protection service wielded little 
regulatory authority, prompting some concern over the pace of 
deforestation. 

Energy and Industry 
Petroleum 

Petroleum dominated the economy throughout the twentieth cen- 
tury. In 1989 the petroleum industry provided almost 13 percent 
of the GDP, 51 percent of government revenues, and 81 percent 
of exports. Before the sharp drop in international oil prices in the 
1980s, these ratios were considerably higher. From 1929 to 1970, 
the year of the country's peak production, Venezuela was the 
world's largest exporter of petroleum. In 1990 the country ranked 
as the third leading oil exporter, after Saudi Arabia and Iran, and 
contained at least 7 percent of proven world oil reserves. 

The country's national petroleum company, the Venezuelan 
Petroleum Corporation (Petroleos de Venezuela, S.A. — PDVSA), 
the third largest international oil conglomerate, owned refineries 
and service stations in North America and Europe. Although 
Venezuela was only the third largest petroleum producer in the 
Western Hemisphere, behind the United States and Mexico, its 
proven reserves, at 58.5 billion barrels in 1989, exceeded those of 
both countries. Venezuela exported 54 percent of its petroleum to 



97 



Venezuela: A Country Study 

the United States in 1988, representing about 8 percent of Ameri- 
can petroleum imports. 

The first commercial drilling of petroleum in Venezuela took 
place in 1917. After World War I, British and American multi- 
national oil companies rushed to Lago de Maracaibo to tap the 
country's huge petroleum reserves. Oil jumped from 31 percent 
of exports to 91 percent from 1924 to 1934. The industry proved 
extremely lucrative to the scores of foreign companies that drilled 
Venezuelan crude because of the country's low wages and nomi- 
nal taxes, policies supported by corrupt relations between foreign 
oil companies and various military dictatorships. 

In the forty-year period after the death of Juan Vicente Gomez 
in 1935, the government and foreign oil companies engaged in a 
tug-of-war over taxation, regulation, and, ultimately, ownership. 
Although Venezuela reaped substantially greater benefits from its 
generous oil endowment after 1943, corruption and deceit on the 
part of the foreign companies and avaricious caudillos such as Pe- 
rez Jimenez still limited the national benefits of the industry. By 
the early 1970s, the possible nationalization of the oil industry be- 
came the focus of debate among labor, businesses, professionals, 
government, and the public at large. Aware of the conflicts and 
subsequent difficulties of Mexico's sudden, dramatic nationaliza- 
tion of the entire oil industry in the 1930s, Venezuela pursued its 
acquisition of the petroleum sector cautiously and deliberately. In 
December 1974, a national commission created by President Pe- 
rez delivered a proposal for nationalization. This proposal formed 
the core of the 1975 law that nationalized the oil industry. The most 
controversial element of the new law was Article 5, which gave the 
government the authority to contract out to multinational firms 
for various technical services and marketing. Despite the con- 
troversy, Article 5 provided technical expertise that proved cru- 
cial to the industry's smooth transition to state control beginning 
on January 1, 1976. 

In 1977 the government created a holding company, PDVSA, 
to serve as the umbrella organization for four major petroleum- 
producing affiliates. This process consolidated the holdings of four- 
teen foreign companies and one national company, the Venezuelan 
Petroleum Corporation (Corporacion Venezolana de Petroleos — 
CVP), into four competing and largely autonomous subsidiaries. 
Industry analysts have credited the competitive structure of the sub- 
sidiaries with increasing overall efficiency to levels well above those 
of most nationalized companies. The largest subsidiary of PDVSA 
was Lagoven, which was composed mainly of the facilities previ- 
ously operated by the United States oil company Exxon. Lagoven 



98 



Research and development laboratory, Petroleos de Venezuela, S.A. (PDVSA) 

Courtesy Inter-American Development Bank 

accounted for 40 percent of national output in 1976. From the hold- 
ings of British and Dutch Shell, PDVSA created a subsidiary called 
Maraven. Four smaller United States companies became Meneven. 
Finally, PDVSA consolidated six smaller foreign firms and the state 
oil company into Corpoven. 

A slump in world oil prices beginning in 1981 rolled back the 
substantial revenues acquired, and largely squandered, during the 
1970s. The symbolic end of PDVSA's prosperity came in 1982, 
when the Central Bank of Venezuela seized US$6 billion of the 
oil company's earnings to help offset the country's growing exter- 
nal debt problems. This action effectively eliminated PDVSA's au- 
tonomy. After oil prices dropped nearly 50 percent in 1986, the 
government accelerated industrial diversification programs in 
specialized petroleum refining, natural gas, petrochemicals, and 
mining, and also stepped up oil exploration efforts. 

Exploration remained a major focus of PDVSA activities in the 
1980s. At the time of nationalization in 1976, exploration efforts 
had come to a near standstill. Little exploratory activity took place 
during the 1960s and 1970s because the Venezuelan government 
did not grant any new oil concessions after 1958 and most foreign 
oil companies anticipated eventual nationalization. Although finan- 
cial constraints slowed the pace of exploratory drilling in the 1980s, 



99 



Venezuela: A Country Study 



major new finds of light, medium, and heavy crude by 1986 nearly 
doubled proven reserves. 

The country's 1989 oil reserves were expected to last for at least 
ninety- three years at prevailing rates of extraction. The Orinoco 
heavy oil belt accounted for 45 percent of proven reserves in 1989, 
followed by the Maracaibo region with 32 percent, the eastern 
Venezuelan basin with 22 percent, and 1 percent in other areas 
(see fig. 6). Only a small fraction of the Orinoco's total heavy oil 
deposits, however, were routinely included in estimates of total 
proven reserves because of the cost and difficulty of extraction. Some 
estimates of total recoverable heavy crude reserves ran as high as 
190 to 200 billion barrels. 

PDVSA's early exploration strategy emphasized heavy crude, 
but by the 1980s the company's efforts shifted toward more valua- 
ble light and medium grades. This approach proved successful, as 
major new discoveries were made in the Lago de Maracaibo area, 
the Apure-Barinas Basin in southwest Venezuela near the Colom- 
bian border, and in the eastern Venezuelan basin in the El Fu- 
rrial/Musipan area in the state of Monagas. Encouraged by its finds 
in the mid-1980s, PDVSA launched further drilling operations in 
the late 1980s, with the goal of adding 14.4 billion barrels of light 
and medium crude to its proven reserves by 1993. In addition to 
its land-based drilling, PDVSA established an increasing number 
of offshore rigs. The Venezuelans also explored off the coast of Aru- 
ba and had discussed with the governments of Guyana, Trinidad 
and Tobago, and Guatemala the prospects of exploratory drilling. 

PDVSA not only extracted crude oil, but also refined and dis- 
tributed a wide variety of petroleum products. In 1988 six active 
refineries in Venezuela boasted an installed refining capacity of 
approximately 1.2 million barrels of oil a day. These refineries 
produced a full range of oil products and specialty fuels, making 
Venezuela an international leader in petroleum refining (see table 
9; table 10, Appendix). PDVSA increased the percentage of local- 
ly refined crude from 35 percent to 58 percent between 1979 and 
1988. In 1988 the country for the first time exported more refined 
petroleum than crude. PDVSA diversified its production during 
the 1980s, increasing the share of petroleum products that fell out- 
side OPEC quotas until the late 1980s, in an effort to enhance price 
stability and boost profits. Orinoco Asphalt (Bitumenes del Orino- 
co), a PDVSA subsidiary, began preliminary shipments in the late 
1980s of orimulsion, a uniquely Venezuelan synthetic fuel derived 
from Orinoco heavy crude, water, and chemical additives. PDVSA 
hoped to export increasing quantities of orimulsion, outside OPEC 
quotas, to Canada and Europe as a substitute for coal or fuel oils 
used by electric power stations. 



100 



The Economy 



From 1983 to 1989, PDVSA acquired overseas refining capaci- 
ty from at least five multinational oil conglomerates, either through 
production contracts or outright purchases. For example, in 1983 
PDVSA bought a 50 percent share of the West German Veba Oil 
Company, thereby acquiring 210,000 barrels per day in overseas 
refining capacity. PDVSA expanded its overseas refining facilities 
in 1986 with a joint venture with the Swedish lubricant and asphalt 
producer, Nynas. Beginning in 1986, PDVSA entered the United 
States oil market by purchasing United States oil firms, refiner- 
ies, and retail outlets previously held by Citgo, Champlin, and 
Unocal. PDVSA 's overseas refining capacity exceeded 700,000 bar- 
rels per day by the close of the decade. By 1990, therefore, PDVSA 
had the capability to refine nearly all of its crude oil production, 
either at home or at Venezuelan-owned facilities overseas. More- 
over, with PDVSA' s purchase of Citgo in 1989, Venezuela became 
the first OPEC member to wholly own a major United States oil 
refinery. 

The United States has consistently been Venezuela's leading oil 
export recipient. During the 1980s, however, PDVSA increased 
its exports to Central America and the Caribbean. In 1980 Venezue- 
la and Mexico embarked on a joint program called the San Jose 
Accord, under which the two oil producers exported oil to many 
countries of the Caribbean Basin (see Glossary) region at conces- 
sionary rates. The accord set up a system of compensatory finance 
and purchases of Venezuelan goods in exchange for crude that 
amounted to a 20 percent discount on the world market price. 

Natural Gas and Petrochemicals 

Venezuela also possessed vast reserves of natural gas. Proven 
gas reserves reached an estimated 3 trillion cubic meters in 1989, 
the second greatest proven reserves in the Western Hemisphere 
after the United States. At current rates of extraction, proven gas 
reserves could meet domestic needs into the twenty- second centu- 
ry. In the late 1980s, the country produced roughly 22 billion cu- 
bic meters of gas a year, most of which was used to meet domestic 
energy needs. 

The natural gas industry increased in importance during the 
1980s as oil prices declined, as more households received piped gas, 
as gas-intensive heavy industries came on-stream, and as liberali- 
zation of foreign investment rapidly expanded the potential of the 
petrochemical industry. Natural gas effectively became the property 
of the state under the Hydrocarbons Reversion Law of 1971, at 
which time the state-owned CVP oversaw exploration. A major 
effort to expand consumer sales of gas in the late 1980s involved 



101 



Venezuela: A Country Study 




Figure 6. Petroleum and Mining, 1990 



gas pipeline construction to provide gas to households. Gas also 
fueled some of the industries in the mining sector. 

Venezuelan Petrochemicals (Petroqufmicas de Venezuela — 
Pequiven), a PDVSA subsidiary established in 1977, oversaw 
petrochemical development. Pequiven 's forerunner institution, the 
Venezuelan Petrochemical Institute (Instituto Venezolano de 
Petroquimicas — I VP), was established in 1956. A source of cor- 
ruption and political patronage, the I VP was reorganized in 1977 
in a controversial decision to bring it within PDVSA 's nascent struc- 
ture. The new Pequiven proved successful under PDVSA 's 
guidance, registering its first profit in 1983. Pequiven extended 
its profits as petrochemical production more than quadrupled from 
1979 to 1988, from 540,000 to 2.3 million tons. 

In 1990 Pequiven consisted of four major subsidiaries and six- 
teen associated companies. Numerous joint ventures with multina- 
tional firms, however, were slated to begin in the mid-1990s. The 
three major petrochemical complexes in Venezuela were at El 



102 



The Economy 



Tablazo in Zulia, Moron in Carabobo, and Jose in Anzoategui. 
El Tablazo, traditionally the largest complex, produced ammonia, 
urea, polystyrene, ethylene, and propylene. The Moron plant, the 
site of the country's first commercial fertilizer production, also fabri- 
cated chlorine, caustic soda, and sulfuric acid, all used in heavy 
industry. The complex in Anzoategui was scheduled to manufac- 
ture liquefied natural gas, methanol, and methyl tertiary-butyl ether 
(MTBE), primarily for export. Among the three complexes, the 
country also produced pesticides, insecticides, resins, explosives, 
aromatics, and dichloroethane and other chemicals. As of 1990, 
a fourth petrochemical complex in Paraguana in the state of Fal- 
con was also anticipated. 

Electricity 

In 1990 Venezuela boasted significant electricity production and 
even greater potential. Besides its plentiful reserves of coal, oil, 
and gas, Venezuela's cascading rivers provided a hydroelectric 
potential in excess of 60,000 megawatts (MW), only a small frac- 
tion of which had been tapped. The country's total installed ca- 
pacity in electricity multiplied more than ten times in the thirty-year 
period from 1960 to 1990, jumping from 1 ,350 M W to over 18,000 
MW. Actual electricity generation paralleled that trend over the 
same time period, spiraling to more than 52 million MW-hours. 
During the same time period, the percentage of electric power at- 
tributed to hydroelectricity rose to about 50 percent by 1990. 
Thermal-based electricity declined accordingly. 

The national power network encompassed both public and pri- 
vate utilities under the regulation of the Ministry of Energy and 
Mines. Four major public-sector utilities supplied over two-thirds 
of the country's electric power, and seven private firms provided 
the remainder. Until the 1986 opening of the massive Guri hydro- 
electricity facility, the National Electricity Company (Compania 
Anonima de Administration y Fomento Electrico — CADAFE) ac- 
counted for over 90 percent of the electric power generated by the 
public sector. CADAFE increased public access to electricity from 
roughly 30 percent in 1960 to an estimated 92 percent by 1990. 
The Guri hydroelectric plant, with over 10,000 MW of installed 
capacity (the world's fourth largest capacity), became the nation's 
largest single source of electricity upon its completion in 1986. The 
Guri Dam, located on the Rio Carom, saved the country the equiva- 
lent of 300,000 barrels of oil a year. 

Venezuela consumed more electricity than any other country in 
Spanish-speaking South America. Industry consumed 53 percent 
of all electricity in 1988, followed by private residences (22 percent), 



103 



Venezuela: A Country Study 



commercial entities (13 percent), and federal and local governments 
(12 percent). Electric rates were highly subsidized until 1989 when 
the government's structural adjustment policies triggered rate in- 
creases of 30 to 65 percent, depending on usage. 

The government's plans for the 1990s focused on expanding 
hydroelectricity output near Ciudad Guayana and reorganizing util- 
ities along more efficient and decentralized lines. The Venezuelan 
Corporation of Guayana (Corporation Venezolana de Guayana — 
CVG) oversaw the 360-MW Macagua I plant on the Rio Carom 
and planned to operate Macagua II, also on the Rio Carom, which 
was slated to provide an additional 2,500 MW by the early to 
mid-1990s. In addition, preliminary engineering work on complexes 
at Caruachi and Tocoma began in 1989; the CVG hoped to fur- 
ther harness the power of the Rio Carom to produce 2,500 MW 
from each of these facilities. The abundant and cheap supplies of 
hydroelectricity near Ciudad Guayana represented a significant ad- 
vantage for Venezuelan heavy industries relative to other South 
American nations. 

Despite these advantages, ambitious long-range expansion plans 
were hampered by the rigid bureaucracy and centralization of 
CADAFE. By some estimates, the company wasted nearly 40 per- 
cent of its generated power through deficient maintenance, frequent 
power failures, and theft. 

Mining 

Venezuela entered the 1990s poised to become a leading inter- 
national producer of coal, iron, steel, aluminum, gold, and other 
minerals. In the late 1980s, the industry employed less than 1 per- 
cent of the labor force, accounted for less than 1 percent of GDP, 
and contributed 13 percent of exports. These figures were likely 
to increase, however, as expanded capacity became operational in 
the 1990s. 

The state historically had played a prominent role in mineral 
policy and production. Beginning in the 1970s, the government 
obtained or established scores of mining enterprises in its pursuit 
of heavy industrial development. By the 1980s, however, the huge 
debts incurred by these ventures contributed to the government's 
decisions to reconsider restrictive foreign investment policies and 
to liberalize mining laws in an effort to expand private- sector par- 
ticipation in mining. The CVG, the country's most prominent 
regional development corporation and the major player in min- 
ing, increasingly entered into joint ventures with foreign compa- 
nies by the 1990s, when for the first time the CVG agreed to accept 
a minority share in some ventures. In addition to its role as planner 



104 



A petrochemical complex run by 
the Instituto Venezolano de 
Petroquimicas in Moron 
Courtesy Inter-American 
Development Bank 



and coordinator of most of the country's mining, the CVG was 
one of Latin America's largest industrial groups, with 30 subsidi- 
aries and 41,000 workers in 1989. According to government sources, 
the CVG and its affiliates accrued US$1.3 billion in profits from 
1985 to 1989 and generated US$3.3 billion in foreign exchange. 

The bauxite and aluminum industry, traditionally smaller in size 
than iron and steel, installed significant new capacity in both min- 
ing and processing during the 1980s. As a result, aluminum be- 
came the country's second leading foreign exchange earner. By 
1990 Venezuela boasted the largest installed capacity in aluminum 
in all of Latin America. Moreover, the country was believed to 
be the world's most economical producer of aluminum because of 
its vast high-quality bauxite reserves, its abundant and cheap ener- 
gy, and its well-developed infrastructure. Proven bauxite reserves 
stood at 500 million tons in 1990, with probable reserves as high 
as 5 billion tons. Overall, the country's smelters, including as many 
as 1,500 small foundries, produced approximately 443,000 tons of 
primary aluminum in 1988. About 60 percent of production, or 
nearly US$1 billion by value, was exported. 

Commercial bauxite production, begun in 1987, reached 1 mil- 
lion tons in 1988 and was expected to reach 4.5 million tons in 
1991. Much of the bauxite of Bauxita de Venezuela (Bauxiven; 
wholly owned by CVG) was processed at the Interamericana de 
Alumina (Interalumina) plant in Puerto Ordaz. Opened in 1983, 



105 



Venezuela: A Country Study 

Interalumina produced 1.3 million tons of aluminum in 1988 from 
its plant's annual capacity of 2 million tons. Jointly owned by the 
CVG and a Swiss company, Alusuisse, Interalumina also controlled 
50 percent of the Belgian Aleurope Aluminum Company, 40 per- 
cent of the Costa Rican firm Alunasa, and 20 percent of the United 
States company Wells Aluminum, thus providing it with world- 
wide marketing outlets. 

Alcasa, the country's first aluminum processing plant, contained 
plants in Ciudad Guayana and Guacara in Carabobo by the 1980s. 
Alcasa 's installed capacity, on the rise throughout the 1980s, was 
intended primarily for specialized overseas aluminum markets. In 
1990 Alcasa had a 120, 000- ton annual capacity for manufactur- 
ing primary aluminum. Alcasa' s expansion plans for the 1990s fore- 
saw a more than doubling of that capacity to as much as 300,000 
tons per annum. 

The country's other major smelter, the Industria Venezolana 
de Aluminio C.A. (Venalum), was also undergoing rapid growth 
in capacity. Although the CVG enjoyed majority ownership of 
Venalum, a consortium of Japanese industrial interests held a con- 
siderable minority stake. 

The iron and steel industries represented the core of the mining 
sector before aluminum's rapid growth in the 1980s. Large-scale 
commercial mining of iron ore in Venezuela began in the early 
1950s, when the Perez Jimenez regime granted iron ore conces- 
sions to two United States steel companies, Bethlehem Steel and 
the United States Steel Corporation. Huge iron reserves, located 
near exploitable hydroelectric resources, combined with a grow- 
ing national demand for steel to set the stage for the creation of 
a steel mill in 1955 near the confluence of the Orinoco and Carom 
rivers. With the creation of the CVG in 1960, the state gained a 
greater role in the country's only major steel plant, which at that 
time produced mainly seamless pipes for the oil industry. One of 
the landmarks of the government's expanding role in the economy 
during the 1970s was the nationalization of the Orinoco Steelworks 
(Siderurgica del Orinoco — Sidor) steel mill on January 1, 1975. 
Funding from the Venezuelan Investment Fund (Fondo de Inver- 
siones de Venezuela — FIV) made possible a smooth settlement with 
the American steel companies. 

The nationalized steel industry set ambitious goals for itself, goals 
it ultimately failed to meet. Slower internal growth dampened local 
demand, and the proliferation of new steel mills in other develop- 
ing nations by the late 1970s reduced international demand. As 
a result, plans to build two new steel complexes were postponed 
indefinitely by the late 1980s. 



106 



The Guri hydroelectric project 
Courtesy Inter-American Development Bank 



107 



Venezuela: A Country Study 

After years of delays, technical bottlenecks, and government mis- 
management, Sidor's expansion made the country self-sufficient 
in steel by 1982. By 1985 steel exports exceeded steel imports five- 
fold. High initial capital investment, however, made the Venezuelan 
industry unprofitable, and Sidor accrued a huge debt estimated 
at US$5 billion to US$10 billion, a substantial portion of Venezue- 
la's debt burden in the early 1980s. Not until 1986 did Sidor show 
its first profit, US$70 million, but this fell to US$26 million in 1987. 
In 1990 the government reportedly was considering privatizing 
Sidor. 

Foreign competition for exports remained the major challenge 
to Venezuela's steel industry in the early 1990s, as steel produc- 
tion continued to increase, rising from 2.7 million tons in 1985 
to 3.6 million tons in 1988, and internal demand remained static. 
Complaints about the dumping of subsidized Venezuelan steel at 
below-average prices impaired greater market penetration in the 
1980s. The government provided subsidies to the Sidor plant, main- 
ly through special foreign exchange rates that allowed the compa- 
ny to purchase imported inputs at a low rate and to pay off its debts 
at a high rate. In 1982 the United States Department of Commerce 
accused Sidor of selling its steel in the United States at a 40-percent 
discount. This complaint led to a 1985 Voluntary Restraint Agree- 
ment (VRA) with the United States, which set a maximum export 
limit of 183,000 tons of steel a year. The two governments reestab- 
lished the VRA in 1989 at 280,000 tons a year, two-thirds of which 
were finished steel products. Venezuela also signed a VRA with 
the European Economic Community in 1987 after similar dump- 
ing allegations were made. 

Although the state dominated the industry, some private steel 
milling went on in 1990. Sivensa, the country's only private steel 
mill, was generally profitable. In addition, the CVG operated as 
a minority shareholder in a steel plant called Metalmeg, which 
manufactured carbon steel products for the petroleum industry. 
In the late 1980s, the Kobe Steel Company of Japan also convert- 
ed its Minorca iron briquette plant into a direct reduction steel mill, 
further expanding steel production capacity. 

The basis of the country's controversial steel industry was its 
enormous iron ore reserves. As of 1990, the government estimates 
of iron reserves for the state of Guayana were 2.8 billion tons of 
high-grade ore (80 percent iron). The CVG iron subsidiary, Fe- 
rrominera, controlled iron ore mining at numerous mines, most 
notably El Cerro Bolivar (southwest of Ciudad Guayana), El Pao 
(south of Ciudad Guayana), and San Isidro. Ferrominera's total in- 
stalled annual capacity was 20 million tons in 1990. Iron production 



108 




Siderurgica del Orinoco (Sidor) steel mill 
Courtesy Inter-American Development Bank 
Loading bauxite ore, Los Pijiguaos Mine, Bolivar State 
Courtesy Inter-American Development Bank 



109 



Venezuela: A Country Study 

fell sharply after its peak year of 1974, but was on the rise again 
by the late 1980s. Iron ore production was 18.9 million tons in 1988. 
Ferrominera's completion of a floating transportation complex on 
the Orinoco in the late 1980s facilitated the industry's use of large 
shipping vessels, thus increasing exports and lowering costs. Ex- 
ports of iron ore reached 11.7 million tons in 1987, with the United 
States, Europe, and Japan the leading purchasers. 

Coal production also expanded rapidly during the 1980s. As with 
iron and bauxite, the country enjoyed large reserves of highly pure 
coal. The state of Zulia alone, for example, contained 900 million 
tons of proven coal deposits, with probable reserves as high as 2 
billion tons. This made Zulia the largest underdeveloped coal field 
in the Americas. Besides Zulia' s coal deposits, the country also pos- 
sessed significant coking coal to fuel the newer steel mills, coal for 
thermal electricity generation, and various deposits of clean-burning 
"hard coal." Most coal deposits were found in the west near the 
border with Colombia or in the Orinoco Basin. 

Three major coal mines accounted for most coal output in the 
late 1980s. Although not yet fully operational in 1990, the Car- 
bones de Zulia (Carbozulia) mine was already the nation's largest. 
PDVSA owned roughly half of Carbozulia; a consortium of Unit- 
ed States, Italian, and private Venezuelan companies accounted 
for the balance. The mine produced 822,000 tons of coal in 1988, 
and plans called for 6.5 million tons-per-year capacity by the 
mid-1990s. By contrast, the entire country produced only 62,000 
tons in 1987. The United States, Italy, and Spain represented the 
major markets for Carbozulia 's coal. The second major mine was 
the Minas Carbon at Lobatera in Tachira near the Colombian bor- 
der, with reserves estimated at as much as 60 million tons. The 
third-leading producer, in Naricual in Anzoategui, boasted reserves 
of approximately 50 million tons. In addition to these operational 
mines, Venezuela had several other key coal zones that remained 
untapped in the 1980s. 

Gold, known to exist since colonial times, did not become a major 
commercial endeavor until the 1980s. Miners long ignored the coun- 
try's gold wealth because of its oil. Furthermore, the gold deposits 
were found mainly in the remote regions bordering Brazil and 
Guyana. The government, however, increasingly prized its gold 
reserves, which stood at 11.5 million troy ounces in 1990, or roughly 
12 percent of world reserves. Gold existed in Venezuela as an ore 
with quartz and in alluvial deposits found naturally with diamonds. 
The government acquired the El Callao gold mine in the state of 
Bolivar in 1974 to better regulate gold prospecting and sales. The 
state succeeded in raising official gold production threefold from 



110 



The Economy 



1984 to 1989, pushing exports to over US$300 million a year. This 
figure made gold the second leading nontraditional export. Un- 
official production, however, remained as high as 70 percent of 
total output. 

After a decade of closely controlling private gold interests, the 
state opened up gold prospecting to foreign interests in the 1980s. 
In 1986 the CVG, in a joint partnership with a Bermuda-based 
company, formed Monarch Resources Limited to mine gold in the 
El Callao region. Private Venezuelan entrepreneurs also exploited 
the nation's gold reserves. 

Venezuela also possessed varying amounts of other metals and 
minerals. For example, the country was a major producer of in- 
dustrial diamonds, although diamond output fell steadily throughout 
the 1980s. The country also contained deposits of copper, nickel, 
zinc, lead, uranium, titanium, palladium, silicon, manganese, and 
chrome. Quarrying for industrial minerals such as feldspar, gyp- 
sum, hydrated lime, salt, phosphate rocks, gravel, barite, pyrophyl- 
lite, asbestos, bentonite, and magnesite was also common. 

Manufacturing 

Government-implemented industrialization policies begun in the 
late 1950s boosted the manufacturing sector. From the early 1970s 
to late 1980s, the state's ownership role in manufacturing increased 
from 4 percent to 42 percent. In 1988 the sector employed 18 per- 
cent of the labor force and accounted for 17.1 percent of GDP . 
Except for the export of processed petroleum and minerals, virtu- 
ally all manufacturing was consumed locally. Manufacturing previ- 
ously had been limited to oil refining, food processing, and 
small-scale enterprises. Domestic manufacturing blossomed some- 
what during World War II as the country substituted local produc- 
tion for imports curtailed by the conflict. The expansion of 
manufacturing accelerated to its fastest pace in the 1950s as the 
world economy boomed, and the government embarked on the eco- 
nomic diversification and industrial development policies it referred 
to as "sowing the oil." By the mid-1970s, the nation's enormous 
oil wealth allowed the government to provide significant aid to in- 
dustry, especially in the form of subsidized credit. Public-sector 
participation in industry expanded considerably with the nation- 
alization of iron and steel in 1975 and petroleum in 1976. But af- 
ter the country had exhausted its reserves from the two oil booms 
of the 1970s, it was forced to reexamine its industrial policies. 
Although Venezuela's level of industrialization was impressive by 
Latin American standards, industry was generally inefficient and 
productivity low. In 1990 Venezuelan industry faced the difficult 



111 



Venezuela: A Country Study 

task of moving beyond local markets and trying to compete in the 
international market. 

By the end of the 1980s, the structure of manufacturing con- 
tinued to be dominated by thousands of small firms in the private 
sector and a few hundred large, mainly public- sector, enterprises. 
In 1988 large firms employed 64 percent of the sector's workforce 
and supplied 78 percent of its output. Most smaller firms were 
family owned. Unlike many Latin American countries, capacity 
utilization among large, state firms was generally better than in 
the private sector. Caracas was the home of just under half of all 
industry, but it provided only 36 percent of its jobs and 26 percent 
of the country's manufactured goods. By contrast, the Ciudad 
Guayana region, with only 3 percent of the country's industrial 
firms, produced 10 percent of all manufactured goods. 

Four broad functional categories made up the manufacturing 
sector: traditional or basic industries, intermediate, capital goods 
and metals, and other. Basic industries included most traditional 
manufacturing, such as food processing, beverages, leather, foot- 
wear, and wood products. Traditional manufacturing constituted 
54 percent of all firms; about three-quarters of these were consi- 
dered small businesses. Intermediate products, such as paper, 
petrochemicals, rubber, plastics, and industrial minerals, represent- 
ed 18 percent of the sector, but their share was growing. The share 
of the capital goods and basic metals subsector was 19 percent by 
1988. These thriving heavier industries included iron, steel, alu- 
minum, transport equipment, and machinery. Other miscellane- 
ous manufacturing accounted for 9 percent of the sector's output. 

The automobile industry was one of Venezuela's largest manufac- 
turing activities outside of petroleum refining and mineral process- 
ing. The industry consisted of Venezuelan subsidiaries of various 
foreign-owned companies. United States automobile companies as- 
sembled 85 percent of the country's vehicles, and European and 
Japanese companies produced 10 percent and 5 percent, respec- 
tively. The two largest United States car companies, General Mo- 
tors and Ford, controlled 70 percent of the Venezuelan automobile 
market, followed by Fiat, Toyota, and Renault. 

At the outset, the Venezuelan automobile industry was almost 
completely an assembly operation, importing most parts. Eventu- 
ally, local factories supplied a greater percentage of parts to the 
assembly line, particularly tires, metal products, and motors. A 
government decree in 1985 required that all car engines be made 
in Venezuela by 1990. 

Venezuela's automobile industry was first established with three 
vehicle assembly plants in the 1950s. By 1984 cumulative output 



112 



The Economy 



had reached 1.7 million vehicles. The industry, protected by im- 
port tariffs as high as 300 percent, soon became virtually the only 
source of the country's transportation fleet. In the late 1980s, fifteen 
producers manufactured scores of models for domestic consump- 
tion, ranking Venezuela with Brazil as the largest per capita 
producers of cars in Latin America. 

Venezuelans rushed to purchase vehicles in the 1970s, when 
generous government price controls on gasoline made driving eco- 
nomical. Production dropped during the less-affluent 1980s, 
however. As in the manufacturing sector at large, increased com- 
petition in the late 1980s forced many lay-offs at automobile fac- 
tories. 

Venezuelan factories manufactured a wide range of new products 
during the 1980s: specialized rubber goods, new paper products, 
ships, and aluminum, among others. A growing trend among 
producers of both new and traditional manufactured goods was 
overseas marketing. The country's traditional manufacturers be- 
gan turning to export markets to enhance efficiency. The popular 
brewery, Polar, for example, turned to the international market 
after absorbing 85 percent of Venezuela's beer market. Following 
the success of other foreign beers in the United States, Polar be- 
gan to export its brew successfully to North America in the late 
1980s. Increased sales helped rank it among the world's fifteen 
largest breweries. The government-owned cement industry like- 
wise expanded exports in the late 1980s, boosting its overall produc- 
tion in the process. Increased production allowed the industry to 
operate at more than 90 percent capacity, an unusually high rate 
of efficiency among Latin American industries. Although some 
manufacturers were expected to succeed in foreign markets, 
economists predicted that many others would close their doors dur- 
ing the 1990s as a result of reduced import protection. 

Having reached a rather advanced stage of physical and human 
resource development by 1990, Venezuela hoped to turn toward 
high-technology areas for future manufacturing expansion. One 
of the country's largest import items, for example, was computer 
equipment. The Perez administration promised to create incen- 
tives for investment in newer industries, such as information tech- 
nology, telecommunications, and electronics. One obstacle to this 
goal, however, was the limited extent of research and develop- 
ment in the economy, particularly in the private sector. The coun- 
try's expenditure on research and development in 1985 stood at 
only 0.41 percent of gross national product (GNP — see Glossary), 
compared with 2.7 percent in the United States. During the 
1990s, the country aspired to reach the level of 1 percent of GNP 



113 



Venezuela: A Country Study 

recommended by the United Nations Educational, Scientific, and 
Cultural Organization. 

Construction 

The construction industry followed a pattern similar to that of 
other Venezuelan industries, flourishing during the 1970s as the 
result of huge government expenditure on physical infrastructure, 
but contracting severely during the 1980s as the economy waned. 
Construction employed about 8 percent of the labor force in 1988 
and contributed about 5 percent of GDP. After reaching a low in 
both output and employment by 1985, the construction indus- 
try rebounded somewhat by 1987 as a result of new government 
investments, increased foreign investment, and liberalization of 
some rent-control policies. The country produced a wide range of 
inputs — such as wood, cement, basic metals, and industrial 
minerals — for construction activity. Venezuelan construction firms 
displayed high levels of technical capability and erected many of 
the nation's complex, heavy-industry structures. 

Although many private construction firms ranked among the 
country's largest companies, the government played an increas- 
ingly more prominent role in the sector by the 1980s. The public 
sector accounted for 77 percent of construction in 1988, compared 
with 32 percent in 1978. State-owned enterprises fulfilled a sub- 
stantial portion of the government's construction activity. Most 
public-sector construction responded to the needs of PDVSA, var- 
ious power companies, and the corporations providing sanitation 
services. 

After a frenzy of building in the 1970s, the country still faced 
an enormous deficit in urban housing in the 1980s. Accelerated 
urban migration forced millions of Caracas residents to live in 
ranchos (see Glossary), or squatter settlements, made from scrap 
materials, largely because of the lack of formal housing. As new 
home starts fell from 35,000 to 15,000 between 1982 and 1983, 
the Ministry of Urban Development (Ministerio de Desarrollo 
Urbano — Mindur) and the National Housing Institute (Instituto 
Nacional de la Vivienda — Inavi) became increasingly involved in 
residential construction. In 1985 public-sector housing construc- 
tion exceeded that of the private sector for the first time; private 
firms, however, produced five times as many single-family homes. 
One obstacle to more rapid growth in housing was restrictive in- 
terest rate policies, which threatened to dry up future mortgage 
financing. 



114 



A thread factory in Guarenas 
Courtesy Inter-American Development Bank 

Services 

Banking and Financial Services 

Venezuela's extensive financial infrastructure, distinguished by 
the specialized nature of its institutions, displayed rapid growth 
from the 1950s through the 1980s. In 1989 the financial services 
sector consisted of forty-one commercial banks, twenty- three 
government development finance institutions, twenty-nine finance 
companies, sixteen mortgage banks, twenty savings and loan as- 
sociations, and scores of other related entities, such as insurance 
companies, liquid asset funds, pension funds, brokerage houses, 
foreign exchange traders, and a stock exchange. The huge oil profits 
of the 1970s prompted the rapid expansion of financial institutions. 
During the less-prosperous 1980s, however, several institutions went 
bankrupt. These insolvencies greatly disrupted the financial sys- 
tem and led the government to intervene to resuscitate some com- 
panies and to force others to close down. The most celebrated of 
these interventions was the 1982 takeover of the Workers' Bank, 
which until that year was the country's fastest- growing financial 
institution. 

The Central Bank of Venezuela (Banco Central de Venezuela — 
BCV) and the Central Office of Coordination and Planning (Oficina 



115 



Venezuela: A Country Study 

Central de Coordination y Planificacion — Cordiplan), with as- 
sistance from the World Bank, sought to modernize, liberalize, and 
consolidate the private financial system in the early 1990s. One 
of the main aims of restructuring was to improve the weak super- 
visory authority of government regulatory bodies such as the Su- 
perintendency of Banks, the Superintendency of Insurance, the 
Deposit Insurance Corporation, and the National Securities Com- 
mission. The same policies sought to redefine and eliminate over- 
lapping responsibilities. Financial authorities also attempted to 
liberalize the BCV's interest-rate policies and strict credit alloca- 
tion provisions, which restricted financial markets (see Monetary 
and Exchange-Rate Policies, this ch.). In addition, policy makers 
contemplated increased participation from foreign banks, which 
had been limited to a 20-percent equity share since 1970, in order 
to make local financial institutions more competitive with interna- 
tional counterparts. Financial restructuring also aspired to create 
new government mechanisms for dealing with ailing financial in- 
stitutions. 

The country's forty-one commercial banks and their hundreds 
of branch offices represented the core of the private financial sys- 
tem. Commercial banks held about 70 percent of the total assets 
of the financial system in 1989. Bank lending policies were gener- 
ally very conservative, favoring high liquidity ratios and emphasiz- 
ing personal relationships. Banks financed mostly the short-term 
credit needs of the economy, reserving long-term financing for 
government development finance institutions. The banking industry 
was highly concentrated; six major banks, all affiliates of the six 
leading financial groups, dominated the industry with ownership 
of 63 percent of total bank deposits and 57 percent of total finan- 
cial system assets. Banco Provincial, Banco de Venezuela, Banco 
Mercantil, and Banco Latino were the largest commercial banks 
in 1989. Fifteen medium-sized banks controlled 29 percent of bank 
deposits, whereas twenty small banks held only 8 percent of such 
deposits. Of the forty-one banks present in 1989, thirty were lo- 
cally owned, private banks; two were privately owned with some 
foreign interests; and nine were government-owned banks. Many 
local banks balked at the prospect of outside competition from larger 
and better capitalized foreign banks. 

The nine public- sector banks that operated as commercial enti- 
ties were the Industrial Bank of Venezuela (Banco Industrial de 
Venezuela — BIV), the Agricultural and Livestock Development 
Bank (Banco de Desarrollo Agropecuario — Bandagro), four regional 
development banks associated with the BIV, and three subsidiaries 
of the BCV (Banco Republica, Banco Italo-Venezolano, and Banco 



116 



The Economy 



Occidental de Descuento). The BIV, the oldest state-owned bank, 
served as the major lender to the public sector and to industry. 
Like its four affiliated regional development banks, the BIV held 
a great many nonperforming loans. Without continued capitali- 
zation from the central government, these five banks likely faced 
insolvency. Bandagro, also dependent on renewed government cap- 
ital, faced large debts in 1990 despite several attempts to restruc- 
ture the institution during the 1980s. Nevertheless, Bandagro 
remained a key lender for medium- sized agricultural enterprises. 
The BCV's three banking subsidiaries, also carrying weak loan 
portfolios, were slated for privatization in the early 1990s. 

In addition to public- sector banks, the state also operated twenty- 
three development finance institutions. Development finance in- 
stitutions typically funded large, long-term development projects 
in both the private and public sectors, generally projects that were 
unable to secure commercial bank loans. Successive governments 
also had established specialized institutions to propel the develop- 
ment of agriculture, industry, urban areas, tourism, and exports. 
The names and functions of these financial institutions, most of 
which were founded after the 1973 oil boom, often changed as suc- 
cessive administrations pursued different development objectives. 

Finance companies, a common institution throughout Latin 
America, met the society's diverse credit needs, ranging from con- 
sumer finance to short- and medium-term loans for local industry 
and commerce. Some twenty-nine finance companies with almost 
100 offices in 1989 held about 20 percent of the national assets, 
ranking them as the second largest type of financial institution in 
the private sector. In Venezuela these companies tended to be rather 
specialized, lending primarily to agriculture, industry, and com- 
mercial activities. Given the local banking industry's conservative 
reputation, finance companies often lent where banks did not. At 
the same time, many of the country's finance companies belonged 
to larger financial groups affiliated with commercial banks. In ad- 
dition to finance companies, the major international credit cards 
did business in Venezuela, thereby supplying another source of 
consumer credit. 

Sixteen mortgage banks served the country's longer-term credit 
needs with more than 100 offices nationwide. Mortgage banks, 
which lent for new construction, home improvements, and residen- 
tial and commercial real estate, contained about 7 percent of the 
total financial system's assets. Like the commercial banks, mort- 
gage banks faced a serious imbalance of liabilities over assets by 
the late 1980s, principally as the result of inconsistent interest rate 
policies on the part of the BCV. The mortgage bank industry was 



117 



Venezuela: A Country Study 

thrown into further disarray in 1989, when the Venezuelan Con- 
gress passed a politically motivated Protection Law for Mortgage 
Owners. As interest rates were liberalized and rose after early 1989, 
the Protection Law for Mortgage Owners established ceilings on 
the proportion of monthly salary that mortgage holders could pay, 
usually no more than 25 percent. This measure aided home owners 
in the short run, but threatened to squeeze mortgage bank credit 
for future housing. 

Savings and loan associations held about 5 percent of the coun- 
try's total financial assets in 1989 and were the key to mobilizing 
the nation's savings. Twenty savings and loans provided short- and 
long-term lending through nearly 300 branch offices. The weak 
portfolios of these institutions in the 1980s required substantial 
government intervention. The National Savings and Loan Bank 
(Banco Nacional de Ahorro y Prestamo — Banap) intervened in the 
savings and loan industry on behalf of the government. Banap be- 
came the regulator, provider of capital, and guarantor of the in- 
dustry. By 1990 some institutions owed as much as 40 percent of 
their overall liabilities to Banap, which itself faced growing finan- 
cial constraints. 

Capital markets constituted the other major component of the 
private financial system. Unlike other financial establishments, cap- 
ital markets were slow to develop and remained quite weak in 1990. 
Among the explanations for the slow growth in capital markets was 
the traditional, family nature of businesses in Venezuela and the 
lopsided distribution of income, which limited the savings or capi- 
tal accumulation of the lower classes. Furthermore, with subsidized 
interest rates, firms usually preferred debt financing or family bor- 
rowing over the mobilization of capital through the sale of equity 
shares. Investors were also skeptical of inadequate government regu- 
lation of publicly traded stocks and the state's history of interven- 
tion in industry. 

The Caracas stock exchange, founded in the late 1940s, was the 
country's major capital market. The exchange operated under the 
nation's 1973 capital markets law, but regulatory changes expect- 
ed in 1990 would allow foreigners to purchase shares on the Cara- 
cas exchange. In 1987, 110 companies were listed on the exchange. 

Transportation 

Venezuela possessed a relatively well- integrated transportation 
network that far exceeded that of most of its South American neigh- 
bors. Roads were the primary means of transportation for both 
passengers and cargo, and the country had the highest percentage 
of paved highways in Latin America. The nation's extensive road 



118 




Figure 7. Transportation System, 1990 



120 



The Economy 



network covered more than 76,600 kilometers in 1988, 34 percent 
of which was paved and 32 percent gravel. The remaining 34 per- 
cent was dirt roads. The southern part of the country lacked a road 
network and was generally not accessible by land. Bountiful oil 
windfalls in the 1970s allowed the country to construct modern 
multilane highways to serve its growing automobile population, 
which exceeded 2.3 million officially registered vehicles by 1986. 
The major international highways included the Colombian- 
Caribbean Highway on the north coast, which connected with the 
Pan-American Highway in Colombia via San Cristobal and provid- 
ed access to Brazil via Santa Elena. There was, however, no direct 
highway access to neighboring Guyana (see fig. 7). Approximately 
55 percent of the capital's streets were paved, and other large cities 
displayed similar ratios. In addition to the comparatively high 
volume of automobile traffic, numerous bus services also trans- 
ported 11.5 million passengers in 1988. 

The country's railroad system was not nearly as extensive as its 
road network, and many industrialists complained that the rail sys- 
tem was insufficient to support the burgeoning mining industry. 
In 1990 railroads spanned only 400 kilometers, carrying passengers 
and freight over two major routes. The main passenger route 
stretched from Barquisimeto to Puerto Cabello. This route also 
passed through the petrochemical complex at Moron. In 1988 the 
nation's trains, excluding the Caracas subway, carried 240,000 pas- 
sengers. The second major rail line ran through the heavy mining 
area south of Ciudad Guayana. 

Caracas also boasted a modern subway system that first opened 
in 1982. Installed by a French company and managed under pri- 
vate service contracts, the Caracas Metro (C.A. Metro de 
Caracas — Cametro) was clean, punctual, safe, and financially sound 
in the late 1980s. Many analysts pointed to the fact that Cametro 's 
employees were not public servants, and therefore not subject to 
the political patronage system, as the main reason for its success 
relative to other Venezuelan public- service companies. Construc- 
tion of the Cametro system continued through 1990, and new lines 
were expected to open. 

Water transport on lakes, rivers, and seas was fairly well deve- 
loped. The National Port Institute (Instituto Nacional de Puertos — 
INP) managed the nation's nine major commercial ports, and var- 
ious government entities administered scores of other ports. INP's 
ports, located on the various types of waterways, were traditionally 
the central shipping facilities. The growth of heavy industry in the 
1980s permitted CVG-supervised ports, the largest being Puerto 



121 




Figure 7. Transportation System, 1990 
120 



Venezuela: A Country Study 

Ordaz, to challenge INP because of their control of heavy minerals 
exports. Nevertheless, INP ports still handled 90 percent of general 
cargo and almost all containerized traffic. The port of La Guaira, 
located in metropolitan Caracas, was the most important INP port, 
followed by Puerto Cabello and Maracaibo. Other ports on the 
Caribbean coast and on Lago de Maracaibo were typically special- 
ized ports that served a particular industry. 

Venezuelan ports — and INP ports in particular — suffered from 
extremely high costs, which were closely tied to the strength of the 
country's longshoremen's unions. A lack of modernization and ex- 
pansion after the 1970s also contributed to low efficiency. In 1990 
the government contemplated increasing the role of the private sec- 
tor in port management to expand port development, a measure 
that was likely to spark conflicts with organized labor. The Venezue- 
lan Shipping Company and dozens of private companies provid- 
ed merchant marine services, including oil tanker service worldwide. 

Air transportation was commonplace in Venezuela, which flew 
nearly 15.7 million total passengers in 1988. Eleven international 
airports served the nation, along with 36 domestic airports and an 
estimated 290 private airstrips. The Maiquetfa International Air- 
port, located twenty-one kilometers outside the Federal District of 
Caracas, was the principal international airport, handling about 
40 percent of all passengers, 84 percent of air cargo, and as much 
as 90 percent of all international flights. The other leading inter- 
national airports were located in Barcelona and Maracaibo. 
Venezuela International Airways (Venezolana Internacional de 
Aviacion S.A. — VI ASA), the government's international carrier, 
provided regular flights to the United States, the Caribbean, Eu- 
rope, and South America. VI AS A maintained a relatively good 
reputation and recorded annual profits through 1990. Two domestic 
carriers, the state-owned Venezuelan Airmail Line (Lmea Aero- 
postal Venezolana — LAV) and the private Avensa corporation, fur- 
nished local air service. Beginning in the late 1980s, Avensa also 
flew a few international routes as well. Numerous air taxis flew 
to more remote areas. Twenty-seven international airlines flew regu- 
larly to Venezuela. 

Telecommunications 

The national telephone company (Compama Nacional de Telefo- 
nos de Venezuela — CANTV) was one of the most notoriously in- 
efficient of government enterprises. According to some estimates, 
CANTV satisfied only 60 percent of national telephone demand 
in the late 1980s. An estimated 1.8 million telephone lines served 
1 .4 million subscribers in 1988, and a backlog of at least 1 million 



122 



The Economy 



persons awaited a telephone line. As a consequence, several utili- 
ties, oil companies, and the military maintained their own private 
telephone networks. To get telephones installed, wealthier con- 
sumers placed ads in papers, bribed telephone crews, or paid ex- 
orbitant rates for cellular telephones. CANTV 's inefficiency 
stemmed from poor management, deficient maintenance, low qual- 
ity of service, and pervasive political patronage. As late as 1988, 
only 40 percent of Caracas residents enjoyed international direct- 
dial capabilities. The Ministry of Transport and Communications' 
plan to alleviate the country's telephone crisis called for a US$1 .6 
billion expansion program from 1989 to 1992, with the goal of 
providing 1 million new direct-dial telephones in that period. The 
expansion program also sought to upgrade the country's dialing 
exchanges and data transmission facilities, and to foster the use 
of fiber-optic technology. It also pursued new satellite facilities 
through a joint venture with COMSAT (Communication Satel- 
lite Corporation), an American company, to be managed by the 
Andean Satellite Corporation (CONDOR) by 1994. Other planned 
reforms called for CANTV to revise its rate structure and to loos- 
en its monopoly by creating several competing companies. Full and 
eventual privatization was also a possibility. 

A subsidiary of CANTV, the Postal and Telegraph Institute (In- 
stitute Postal Telegrafico — Ipostel), provided mail and telegraph 
services. Both services were generally very slow and unreliable 
despite the existence of 800 telegraph stations nationwide. As a 
result, the use of motorcycle mail carriers was common. CANTV 
also administered 17,500 telex lines for more than 13,000 sub- 
scribers, over half of whom were in the metropolitan Caracas area. 

Tourism 

Tourism was a rather minor and undeveloped industry in 
Venezuela. In the 1970s, the government targeted domestic vaca- 
tioners to some extent, but by the late 1980s promotion of tourism 
focused on the potential foreign-exchange revenues of international 
visitors. The Venezuelan Tourism Corporation spurred tourist in- 
frastructural development with concessionary financing and inter- 
national promotional efforts. 

Tourist arrivals fluctuated widely in the 1970s and 1980s, mainly 
in line with prevailing exchange-rate policies. For example, as the 
bolivar appreciated vis-a-vis the United States dollar prior to the 
1983 devaluations, tourist arrivals declined, but arrivals more than 
doubled from 1984 to 1986. In 1988 an estimated 336,541 tourists 
visited Venezuela, generating upwards of US$200 million in 
revenue. The 1989 riots, however, were expected to hurt arrivals 



123 



Venezuela: A Country Study 

in the short run. Approximately 99 percent of all foreign tourists 
came from the Western Hemisphere or Europe. United States 
citizens entered with only a tourist card, obtainable on the flight 
to Venezuela. Cruise ships also visited several ports. In the late 
1980s, nearly 2,000 lodging facilities offered 60,000 guest rooms. 
The peak tourism months were July, August, December, and 
January. 

Foreign Economic Relations 
Foreign Trade 

The importance of oil exports made foreign trade essential to 
the country's prosperity. Venezuela benefited from extraordinar- 
ily favorable terms of trade in the 1970s — the quadrupling of oil 
prices in 1973 alone provided the nation with unprecedented wealth. 
Despite its benefits, the increase in oil exports also exacerbated the 
country's overreliance on a single export commodity; oil often ex- 
ceeded 90 percent of total export value in the early 1980s. The oil 
boom also affected import patterns. Because of the huge foreign- 
exchange revenues from oil, the country developed a voracious de- 
mand for imported luxury goods that persisted even as oil prices 
ebbed in the mid- to late 1980s. The 50-percent reduction in world 
oil prices in 1986 underscored these structural weaknesses in the 
Venezuelan economy. 

In 1988 official imports totaled US$10.9 billion; the country also 
ran a trade deficit in that year of US$758 million, the first since 
1978 (see table 11, Appendix). The country's imports peaked in 
1982 at US$11.7 billion, before the 1983 economic crisis and the 
subsequent imposition of multiple exchange rates, higher tariffs, 
and greater nontariff barriers, all of which stifled new imports. 
These protective import measures caused imports to drop by 43 
percent from 1983 to 1986, before imports surged again to the 1988 
level. In 1988 raw materials represented 44 percent of all imports, 
followed by machinery (26 percent), transportation goods (16 per- 
cent), and consumer goods (15 percent). The United States, tradi- 
tionally Venezuela's leading source of imports, supplied 44 percent 
of all foreign goods in 1988. Overall, Venezuela ranked as the six- 
teenth largest trading partner of the United States and was the 
largest export market for the state of Florida. In 1988 the Federal 
Republic of Germany (West Germany) trailed the United States 
with 8 percent of all imports, followed by Italy with 6 percent, and 
Japan with 5 percent. Brazil, France, Britain, and Canada were 
other notable suppliers. Imports from members of the Andean 



124 



The Economy 



Common Market (Ancom — see Glossary) — Colombia, Peru, Ec- 
uador, and Bolivia — accounted for only a small fraction of total 
imports. 

Import policy traditionally sought to protect local industry and 
agriculture from foreign competition and to substitute local produc- 
tion for imports. The government accomplished these goals through 
exchange-rate manipulation, the imposition of tariffs, and through 
import licensing restrictions. In 1988 there were forty-one differ- 
ent tariff rates on more than 6,000 goods. Although tariffs some- 
times exceeded 100 percent, the average was 37 percent. Fiscal 
policies, however, reimbursed as much as two-thirds of these tariff 
payments through a complex system that favored priority develop- 
ment activities. Nevertheless, as part of the 1989 structural adjust- 
ment policies, the Perez administration chose to liberalize the import 
regime to force local industries and farms to be more competitive 
with international counterparts, much to the displeasure of most 
local businessmen. In 1989 the government reduced the maximum 
tariff to 80 percent to simplify tariffs into a uniform structure, ex- 
pected to include a maximum of 20 percent and a minimum of 
10 percent tariffs by 1993. Import liberalization also addressed non- 
tariff barriers, such as import licensing agreements, which further 
hampered the free flow of imports and often bred corruption. The 
government abolished most import licenses in 1989, including those 
of several state-owned enterprises. Economists expected that liber- 
alization policies would hurt the country's balance of payments in 
the short run, but make the economy more competitive in the long 
run. Improved access for imports was also expected to increase trade 
flows from within the Andean region. 

Exports declined in the early 1980s, then rose unevenly in the 
late 1980s, but still did not come close to the peak level of US$20. 1 
billion in 1981. Both export and import figures excluded substan- 
tial contraband trade along the Colombian border. Declining ex- 
ports in the 1980s resulted almost entirely from lower oil prices. 
Traditional exports — oil, iron, coffee, and cocoa — averaged about 
95 percent of total exports from 1980 to 1985, but fell as a percent- 
age of total exports after the drop in oil prices in 1986. The role 
of nontraditional exports jumped from 4 percent of total exports 
in 1980 to 18 percent by 1988. Increased overseas sales of alumi- 
num, steel, and petrochemicals also diversified the country's ex- 
port base. The public sector produced nearly all the country's 
exports. The state also exported as much as two- thirds of all non- 
traditional goods in 1988, but the increasing role of private invest- 
ment in basic metals and petrochemicals was expected to lower that 
percentage during the 1990s. 



125 



Venezuela: A Country Study 



Venezuela shipped half of its exports to the United States in 1988, 
with another 6 percent destined for West Germany, 4 percent for 
Japan, 4 percent for Cuba, and nearly another 4 percent for Cana- 
da. Ancom countries received an average of about 2 percent of ex- 
ports in the 1980s. Venezuela exported oil to a large number of 
other countries, quantities of which were often controlled under 
OPEC quotas or other agreements, such as the San Jose Accord 
(see Petroleum; Natural Gas and Petrochemicals, this ch.). 

Trade policy focused on making national exports more competi- 
tive and diversifying away from an overdependence on oil. The 
most consequential reform toward this goal was the 1 989 devalua- 
tion of the bolivar to market levels. The devaluation made Venezue- 
lan exports cheaper and imports more expensive, thereby favoring 
export-oriented production over import-dependent activities. The 
Foreign Trade Institute, a government body, also sought to expe- 
dite exporting procedures to encourage entrepreneurs to seek for- 
eign markets. 

Trade policy, however, also concentrated on the goal of Venezue- 
la's accession to the General Agreement on Tariffs and Trade 
(GATT — see Glossary) during the early 1990s. Venezuelan ad- 
herence to the GATT entailed several unpopular policy reforms, 
some of which would come at the expense of exporters. For exam- 
ple, the government reexamined the various subsidies it afforded 
to exporters, many of which were in violation of GATT regula- 
tions. As a result, the government curtailed the amount of subsi- 
dized credit offered to merchants for financing exports, credit that 
paid for as much as 25 percent of exports in a given year during 
the 1980s. Likewise, exporters received tax rebates, or bonos de ex- 
portation, which the GATT also considered an unfair export subsi- 
dy. The government planned to phase out these rebates in the early 
1990s, a decision opposed by various export associations because 
of the country's already weak export infrastructure for nontradi- 
tional items. Other subsidies found throughout the economy, such 
as subsidized industrial and agricultural credit, were also poten- 
tially affected. The tariff reductions begun in 1989 also worked to 
fulfill GATT requirements. 

Venezuela joined Ancom in 1973 and became a signatory to the 
Latin American Free Trade Association (LAFTA) in 1982. Cara- 
cas was the headquarters of Ancom 's Andean Development Cor- 
poration and the region's Latin American Economic System 
(Sistema Economic© Latinoamericano — SELA); the latter was dedi- 
cated to analyzing economic and social policies throughout the 
hemisphere. Although thoroughly endorsing the aims of these 
organizations, Venezuela played only a minimal role in regional 



126 



The Economy 



economic relations because the composition of its trade provided 
it with only limited interaction with neighboring economies. 
Venezuela did, however, accept Ancom's provisions to lower the 
profile of foreign investment by reducing the level of such invest- 
ment to 50 or 20 percent depending on the sector. Nevertheless, 
as Chile, Ecuador, Bolivia, and eventually Venezuela embraced 
more orthodox economic policies in the late 1970s and 1980s, the 
integration pact diminished in significance. By 1990 Venezuela an- 
ticipated liberalizing its foreign investment code to promote new 
multinational ventures, thereby breaking with Ancom's stipulations. 

Balance of Payments 

As did its trade, Venezuela's balance of payments experienced 
wide swings in the 1980s after enormous success in the 1970s. These 
fluctuations, largely negative, depended primarily on the prevail- 
ing value of exports and the level of the country's foreign debt pay- 
ments. As oil prices fell and interest rates soared in the early 1980s, 
international accounts recorded a massive deficit in 1982. Greater 
import protection in 1983 produced renewed balance-of-payments 
surpluses from 1983 to 1986. But as oil prices fell in 1986, overall 
payments turned highly negative, culminating in a US$4.7 billion 
shortfall in 1988. Besides oil price fluctuations, the balance of pay- 
ments also suffered from huge capital outflows associated with an- 
nual, multibillion-dollar debt repayments and private capital flight 
precipitated by the deteriorating economy. As commercial banks 
turned away from issuing new loans to Latin America in the 1980s, 
the country faced a net outflow of capital, exacerbated by the fact 
that its high per capita income excluded it from multilateral financing. 

The current account of the balance of payments moved into a 
deficit position as exports fell from 1986 to 1988 because of dwin- 
dling oil prices. Slightly higher oil prices in 1989 improved the cur- 
rent account again, but large drawdowns on the country's 
international reserves provided the economy little flexibility. Af- 
ter accruing a level of international reserves equal to that of the 
rest of Latin America combined in 1975, by 1990 the country's 
reserves were depleted to such an extent that they covered only 
a few months of imports. Aside from the large role of merchandise 
trade in the current account, net services and transfers represent- 
ed a major drain in the 1980s. Deficits on the services and trans- 
fers portion of the current account were largely the result of steep 
interest payments on the foreign debt. Venezuelans' penchant for 
foreign travel and costly international freight and insurance ex- 
penses also caused the services and transfers deficit to exceed US$3 
billion on average during the 1980s. 



127 



Venezuela: A Country Study 

The capital account experienced large deficits for the first half 
of the 1980s, but improved after 1985 as new private investment 
and short-term financing offset some of the outflows of private cap- 
ital and principal payments on the country's foreign debt. The 
reduction of capital-account deficits after 1985 was significant be- 
cause the country could no longer rely on immense current account 
surpluses, as it had historically, to balance international payments. 
Despite this trend, average net capital outflows of roughly US$2 
billion were registered from 1983 to 1988 as debt repayment 
proceeded and few new foreign loans were assumed. In 1986 the 
Japanese Export-Import Bank provided badly needed new monies 
for import financing, an infusion that also slowed capital outflows. 
By 1989 the IMF and World Bank also supplied large financial 
resources in support of the government's structural reforms and 
in an effort to improve its worsening international financial position. 

As the country moved toward a more flexible position on for- 
eign investment in the late 1980s, new inflows of direct foreign in- 
vestment appeared after near stagnation in the early 1980s. From 
1986 to 1989, foreign investment averaged US$300 million a year, 
an increase that eased the crunch on capital. In 1988 total foreign 
investment stood at US$2.2 billion; a little over half of this total 
was attributed to United States investors, followed by British, Swiss, 
and German investors. Analysts anticipated even greater private 
capital inflows associated with continuing debt-for-equity swaps. 
Nevertheless, in 1990 large sums of private Venezuelan capital re- 
mained overseas, insulated from the uncertainties of the local econ- 
omy. During the 1970s and 1980s, more than US$34 billion in 
private capital left Venezuela, ranking it as one of the world's 
severest cases of capital flight. 

Foreign Debt 

Venezuela's public and private sectors owed as much as US$35 
billion in debt in 1989, although data on debt varied considerably 
because of ongoing debt negotiations and reduction plans (see ta- 
ble 12, Appendix). The country ranked as Latin America's fourth 
leading debtor behind Brazil, Mexico, and Argentina; it was also 
one of the world's top twenty "highly indebted nations," as de- 
fined by the World Bank. Unlike many developing countries, 
Venezuela could not ascribe its huge indebtedness to the misfor- 
tunes of the oil price hikes of the 1970s. On the contrary, Venezuela 
benefited handsomely from the oil crises of the 1970s. Like several 
other oil economies, however, Venezuela squandered much of its 
newly found revenues through poor economic management, cor- 
ruption, and over-ambitious development projects. Although oil 



128 



The Economy 



financed economic improvements, the resulting public-sector in- 
debtedness, which skyrocketed from under US$350 million in 1970 
to US$10 billion by 1980 to US$25 billion in 1990, in no way com- 
pensated for the return on oil-based investments. 

The country was atypical of other major debtor nations in other 
ways as well. Most notably, Venezuela actually paid both the in- 
terest and the principal of its debt during the 1980s, and its pay- 
ments from 1983 to 1988 alone exceeded US$35 billion. These debt 
payments were pivotal in creating the large capital outflows that 
the nation suffered during the decade. Although the government 
temporarily held back debt payments in 1983 and again in 1988 
because of ongoing negotiations, many in the international finan- 
cial community still viewed Venezuela as a model debtor in many 
respects. 

The structure of the country's debt was also distinct, as it was 
owed almost entirely to commercial banks rather than to multilateral 
institutions or bilateral agencies. In fact, Venezuela owed a higher 
percentage of its debt to commercial banks (at least 85 percent) 
than did any of the highly indebted countries. Another distinction 
was the large amount of private foreign debt. This private debt, 
estimated at US$4.5 billion in 1989, was declining under a set of 
agreements established in the early and mid-1980s. Finally, un- 
like most other debtors, Venezuela was also a major creditor to 
other developing countries (see Foreign Assistance, this ch.). 

After securing debt rescheduling agreements in 1983, 1986, and 
1987 to ease the terms of its repayments, Venezuela concentrated 
its debt management efforts in 1989 and 1990 on complex debt 
reduction plans with its more than 450 creditors. By early 1990, 
the banks, the government, and the government's Bank Advisory 
Committee had agreed in principle on a series of measures to reduce 
the country's debt. Although not all provisions were resolved, the 
plan offered what was termed a "debt reduction menu." Because 
of the number of creditors involved, the government provided a 
wide range of reduction options. Debt reduction, aimed at lower- 
ing total debt by one-fourth, offered creditors a range of short- and 
long-term bonds, some guaranteed by the United States Treasu- 
ry. The various bonds offered highly favorable short-term relief, 
or conversions into discounted cash, equity, or other debt conver- 
sion mechanisms. The reduction plan fell under the auspices of 
the "Brady Plan," named after United States treasury secretary 
Nicolas Brady, who devised a worldwide debt reduction program. 

As a consequence of the Brady Plan, United States Treasury 
officials encouraged United States commercial banks to accept the 
terms of the plan to mitigate the international debt crisis and to 



129 



Venezuela: A Country Study 



strengthen the United States hand in its resolution. American 
bankers, however, generally frowned upon the Venezuelan plan 
because of the country's relative prosperity and its track record 
of questionable economic management. The February 1989 riots, 
apparently provoked by economic austerity measures, strengthened 
the Venezuelan government's hand in pressing for debt negotia- 
tions. PDVSA's 1989 purchase of the Citgo oil company in the 
midst of the country's debt negotiations, however, cast doubts in 
the minds of many United States financiers about the country's 
genuine need for debt relief. 

As early as 1987, Venezuela had initiated a debt-for-equity pro- 
gram to lower its debt, to privatize inefficient semiautonomous 
government agencies, and to stimulate foreign investment. The 
plan proceeded slowly because exchange-rate provisions until 1988 
offered currency transactions at overvalued official rates rather than 
market rates. After only three debt swaps in 1988, the Ministry 
of Finance instituted debt-for-equity auctions in November 1989, 
where projects previously approved by the state corporation Su- 
perintendency of Foreign Investment (Sistema de Inversiones 
Extranjeras — SIEX) could trade paper debt for discounted bolf- 
vares with a monthly limit of US$80 million. Authorities imposed 
this US$80 million limit to restrain possible surges in the money 
supply created by bolivar conversions. Such limits, however, 
prevented debt-for-equity deals in many larger-scale projects in min- 
ing and petrochemicals. Debt swaps in 1989 and 1990 financed 
new investments in cement, paper, steel, aluminum, and tourism. 
Scores of additional SIEX-approved projects, valued at over US$2 
billion, awaited further bidding in 1990. 

Foreign Assistance 

As the wealthiest country in Latin America and an OPEC mem- 
ber, Venezuela was more frequently a donor than a recipient of 
foreign assistance. The United States stopped providing aid to 
Venezuela in the mid-1960s; nor did any bilateral development 
agency give Venezuela assistance. Instead, Venezuela's bilateral 
economic relations were characterized by technical cooperation 
agreements, student exchanges, or commercial accords similar to 
those signed by the major industrial nations. Its oil wealth in the 
1970s, however, did allow the country to become a major provider 
of bilateral and multilateral financing. From 1974 to 1981, the na- 
tion contributed US$7.3 billion to international development, 64 
percent of which went to multilateral sources, such as the United 
Nations Special Fund, the Andean Reserve Fund, the OPEC Fund, 
the Coffee Stabilization Fund, the Caribbean Development Bank, 



130 



The Economy 



and the Central American Bank for Integration, among others. 
In addition, Caracas was the headquarters of the affiliates or insti- 
tutes of many regional and international organizations. Total an- 
nual contributions in the late 1970s averaged 1 .88 percent of GDP, 
above the 1 percent level suggested by the United Nations for de- 
veloped countries. Most bilateral assistance, funneled through the 
FIV, went to Andean nations, Central America, and the Carib- 
bean. Venezuela used this oil wealth to enlarge its profile in regional 
and international affairs, a prestige it aggressively sought. 

As its prosperity eroded in the 1980s, Venezuela saw its role as 
a donor, particularly as a bilateral one, wane. The country's most 
prominent economic assistance during the decade was dispensed 
through the joint San Jose Accord that it administered along with 
Mexico in order to provide subsidized oil to the Caribbean Basin 
region. Throughout the decade, Venezuela remained disposed to 
intervene in Central America. After supporting the Sandinista Na- 
tional Liberation Front (Frente Sandinista de Liberacion 
Nacional — FSLN) against the Somoza dictatorship in Nicaragua 
in 1979, the Venezuelan government also provided financial as- 
sistance to the Sandinistas' opposition, the National Opposition 
Union (Union Nacional Opositora — UNO), in its successful bid 
for power in 1990. Some minimal bilateral funding through the 
FIV continued in the early 1990s, mainly to promote the coun- 
try's commercial interests. 

In the 1980s, however, Venezuela sought funds from the major 
multilaterals, such as the World Bank and the IMF, after more 
than a decade of detachment. The World Bank was active in 
Venezuela from 1961 to 1974, disbursing thirteen loans worth 
US$340 million. Because of its high per capita income, however, 
Venezuela did not become eligible for World Bank financing until 
1986. In 1989 it received over US$700 million in the form of a 
structural adjustment loan and a trade reform loan. Venezuela also 
used its large and previously untapped reserves at the IMF in 1989, 
when the IMF disbursed the first installment of a three-year Ex- 
tended Fund Facility in the amount of US$4.8 billion. These new 
funds helped ease the country's painful transition to a more open 
economy, a transition undertaken largely on the advice of the IMF 
and the World Bank. Another multilateral agency, the Inter- 
American Development Bank (IDB), also continued to fund 
Venezuela's development in highway construction, forestry pro- 
grams, water and sanitation projects, mining, and other infrastruc- 
ture projects. In cumulative terms, the IDB provided approximately 
US$1.3 billion from 1961 to 1990. 



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Venezuela: A Country Study 

The economic reforms begun by the Perez administration in 1 989 
tracked with the prevailing liberal orthodoxy of international eco- 
nomics, but flew in the face of traditional Venezuelan state inter- 
vention. It remained to be seen whether Perez would be able to 
weather the political storm created by his restructuring, and whether 
his program would show enough tangible benefits to warrant its 
retention and expansion under his successor. 

* * * 

As of 1990, there was no economic study available in English 
that examined in depth Venezuela's transition toward a more 
private-sector and market-oriented economy. Nonetheless, several 
valuable studies throughout the 1980s provided insight into the na- 
tion's evolving political economy. An excellent collection of essays 
appears in John D. Martz and David J. Meyers 's Venezuela: The 
Democratic Experience. Laura Randall's The Political Economy of Venezue- 
lan Oil and David Eugene Blank's Venezuela: Politics in a Petroleum 
Republic provide informative analysis on the country's pivotal oil 
industry. Some outstanding journal articles include Vladimir Chel- 
minski's "The Venezuelan Experience: How Misguided Policies 
Paralyzed a Prosperous Economy," Rene Salgado's "Economic 
Pressure Groups and Policy Making in Venezuela: The Case of 
FEDECAMARAS Reconsidered," and a series of articles by South 
magazine in August 1989. The best source of economic statistics 
includes the publication of the Oficina Central de Estadistica e In- 
formatica, Anuario Estadistico de Venezuela, as well as numerous pub- 
lications from the International Monetary Fund, the World Bank, 
the Economist Intelligence Unit, the United Nations Economic 
Commission for Latin America and the Caribbean, the Inter- 
American Development Bank, and the United States Department 
of Agriculture. (For further information and complete citations, 
see Bibliography.) 



132 



Chapter 4. Government and Politics 




President Carlos Andres Perez (1974-79; 1989-) 



THE DEVELOPMENT OF a stable, democratic political system 
in Venezuela after 1958 represents a remarkable accomplishment. 
Few political scientists and historians in the late 1950s would have 
predicted that Venezuela would become a democratic model. The 
nation's turbulent past, which saw numerous regime changes, some 
of them violent, and its tradition of instability and penchant for 
repeatedly revamping its constitutions gave few hints of its impend- 
ing transformation. 

At the core of this transformation has been the emergence and 
the strengthening of a diverse party system that has progressively 
converged toward the center-left in its ideology and its policy orien- 
tation without abandoning pluralism. Elections since 1958 have 
been vigorously contested on a regular and predictable timetable. 
Political freedoms have been enjoyed by those in and out of pow- 
er; presidents have been blessed with the sense that their mandate 
was legitimate. Perhaps even more extraordinary in the context 
of Latin American politics, outgoing presidents have peacefully 
handed over power to incoming presidents from another party of 
somewhat divergent political orientation. 

This transformation from an authoritarian past to a healthy and 
long- surviving democratic regime cannot be understood in a vacu- 
um, however. The political system evolved from a past fraught with 
instability and authoritarianism. After the heroic years of indepen- 
dence, Venezuelans suffered under the corruption and brutality 
of caudillismo (rule by local strongmen, or caudillos), fought a major 
civil war, and saw the constant redrafting of the constitution and 
changes in the rules of the political game. 

Venezuela's independence began with its liberation by Simon 
Bolivar Palacios, who freed not only his own homeland but also 
much of the rest of South America. In 1830, with the collapse of 
Bolivar's dream of a larger Gran Colombia (see Glossary), Vene- 
zuela was ruled by General Jose Antonio Paez, a patriot caudillo 
from the llanos (see Glossary), or plains (see A Century of Caudi- 
llismo, ch. 1). This first postindependence period lasted until about 
1858 and was characterized by economic recovery and political sta- 
bility as the young nation functioned under the reign of a conser- 
vative oligarchy. Paez established the model of strongman rule 
under which an undisputed caudillo governed for a long period, 
either on his own or through the selection of handpicked loyal subor- 
dinates, thus preserving the appearance of constitutional presidential 



135 



Venezuela: A Country Study 

succession. These traditional caudillos, who preserved constitutional 
appearances while subverting the constitution's spirit, also elevated 
the role of Caracas as the political and economic center of the coun- 
try. Throughout the nineteenth century and to this day, the prin- 
cipal goal of traditional and modern caudillos has been to take hold 
of and control the capital and, from the center, dominate and over- 
whelm the periphery. 

The discovery and exploration of large oil reserves early in the 
twentieth century accelerated the demise of old-style caudillo rule. 
But although change took place, emerging constitutional ideals had 
to compete with the traditional political realities that persisted. 
Nevertheless, by the time the long-lived dictator Juan Vicente 
Gomez died in his sleep in 1935, the seeds of democratic transfor- 
mation had already been planted. The short-lived student protest 
of 1928 was the first manifestation of democratic stirrings that were 
to flourish decades later. 

The Generation of 1928 that sprang from that experience in- 
cluded future Venezuelan presidents and eminent political lead- 
ers of diverse political views, such as Romulo Betancourt, Rafael 
Caldera Rodriguez, Jovito Villalba, Gustavo Machado, and Raul 
Leoni. For a brief three years, between 1945 and 1948, many of 
these leaders experienced their first taste of democratic rule; but 
they were then perhaps too young and too impatient, and their 
democratic experiment was short-lived. Exile gave these leaders 
broader perspectives and provided essential links to other democratic 
forces. The last decade of dictatorship ended in 1958; by then the 
Generation of 1928 was prepared to implement democratic reforms 
without being overthrown in the process. 

Since 1958 democracy has survived, although its record has not 
been uncheckered. Coup attempts, especially in the early years, 
were fomented by extremists of both the right and the left, some- 
times in the pay of or under the inspiration of extremists from out- 
side the country. But the constitution of 1961 has not been rewritten 
or abolished, even if the spirit of the charter has not always been 
observed. Corruption has existed as well. At times the oil bonanza 
has led to a disregard for fiscal responsibility and has also enhanced 
the notion that the government can always afford the luxury of one 
more panacea. 

An oil-rich nation, Venezuela by 1990 enjoyed the highest an- 
nual per capita income in Latin America and a politically moder- 
ate labor movement (see Labor, ch. 3). After more than three 
decades of democracy and a spirited presidential campaign, 
however, food riots in Caracas and elsewhere in the spring of 1989 
shocked Venezuelans and forced them to contemplate the apparent 



136 



Government and Politics 



fragility of their socio-political system. The food riots and looting 
of 1989, in which hundreds of people died violently, presented a 
stark reminder that Venezuelan democracy, although enviable by 
Latin American standards, was not without its flaws and its vul- 
nerabilities. 

The Governmental System 

The Venezuelan governmental system has been characterized 
by contradictions in theory and practice. Although its constitutions 
pledged federalism and a separation of powers, political practice 
and custom gave an undeniable primacy to the government in Cara- 
cas and to the president, in particular. Even under the constitu- 
tion of 1961, which gives extraordinary guarantees and rights to 
ordinary Venezuelans, the bureaucratic system has continued to 
favor those with family and political connections. Although the 
underlying system predates the democratic transition of 1958, it 
has broadened and become more pluralistic as more individuals 
and political brokers achieved influence in the drafting and im- 
plementation of policies. 

The formal constitutional structure is fairly straightforward in 
its provisions. The pronouncements on individual and group rights, 
on the other hand, are imaginative, especially those articles deal- 
ing with social and welfare rights. This blend of traditional arti- 
cles and those that reflect commitments to reform and social justice 
makes the constitution of 1961 an interesting case study. 

Under its twenty-sixth constitution, adopted on January 23, 
1961, Venezuela is a federal republic made up of twenty states, 
two federal territories (Amazonas and Delta Amacuro), and a 
Federal District (Caracas) (see fig. 1). In addition, there are seventy- 
two island dependencies in the Caribbean. The power of the gov- 
ernment is divided between the national government and the 
states, districts, and municipalities. Throughout most of its his- 
tory, however, the national governmental power in Caracas has pre- 
dominated. 

Although the states did have some powers of their own and en- 
joyed some autonomy, until 1989 they were administered by gover- 
nors appointed by the president. The first direct popular election 
of governors took place in July 1989. Even though they gained an 
independent political base, these governors still depended on the 
national government for their budgets. In contrast, the states had 
a much longer history of electing unicameral legislative assemblies. 
States have also been subdivided historically into county-like dis- 
tricts with popularly elected district councils and municipalities with 



137 



Venezuela: A Country Study 



popularly elected municipal councils. The Federal District and the 
federal territories similarly had elected councils. 

Even though the president has considerable power, the consti- 
tution does place specific limitations on who may run for the pres- 
idency. Further, a retiring president may not return to the presiden- 
cy until two terms, or ten years, have elapsed. Carlos Andres Pe- 
rez, reelected in 1989, became the first president since 1958 to 
occupy the highest office twice. Former presidents automatically 
become life members of the Senate (upper house of the Congress). 
Traditionally, they have also been viewed as elder statesmen. This 
was particularly true in the case of Romulo Betancourt (president, 
1959-64), who, with his great prestige, continued to exert consider- 
able influence years after he had left the presidency. 

The constitution provides for the direct election of the president, 
who is chosen under universal suffrage for a five-year term. The 
president appoints and presides over the cabinet and determines 
the number of ministries. The office of vice president, which had 
been at times provided for in earlier Venezuelan constitutions, is 
not mentioned in the 1961 document. One anecdote holds that wily 
Juan Vicente Gomez (president, 1908-35) abolished the office of 
the vice president in a turn-of-the-century constitution after he, 
as vice president, had moved to the top office during the absence 
of president Cipriano Castro. Nearly a century later, the Venezue- 
lan governmental system retained in its constitution traditional ways 
of protecting the president from the possibly fatal ambitions of a 
second-in-command . 

Unlike the constitution followed in the time of the dictator Go- 
mez, however, the 1961 constitution provides for mandatory vot- 
ing for all Venezuelan citizens who are at least eighteen years old 
and who are not convicts or members of the armed forces. Gener- 
ally, more than 80 percent of those registered voted. Each politi- 
cal party had its own ballot with a distinctive color and symbol, 
so that even illiterate citizens could recognize their preferred party 
choice. Elections were supervised by an independent, federally ap- 
pointed electoral commission. Constitutionally assured elections, 
universal suffrage, and participation in politics for over three de- 
cades have made Venezuela a unique and much admired democrat- 
ic model in Latin America. 

Constitutional Development 

Until 1961 Venezuela had the unenviable distinction of having 
been governed by more constitutions than any other Latin Ameri- 
can country. This heritage was partly the result of the trauma of 
a prolonged war of independence that tested the country's fragile 



138 



Government and Politics 

social cohesion. Venezuelans are proud of the fact that Bolivar 
brought freedom to his homeland as well as to the homelands of 
thousands of other Latin Americans; this epic crusade, however, 
carried an enormous financial and human burden. The struggle 
also often pitted the criollo elite, exemplified by Bolivar, against 
pardos (see Glossary), who rightfully felt that they had improved 
their lot under Spanish rule. In turn, regional elites, resentful of 
Caracas's ascendancy, refused to join the crusade and often turned 
to the Spanish side in an effort to curtail Bolivar's power (see The 
Epic of Independence, ch. 1). 

The prolonged war for independence and the subsequent jock- 
eying for power among caudillos, both regional and national, in 
part accounted for the changes in constitutions and in constitutional 
provisions to better suit the temper and the realities of the times. 
Each caudillo scrapped the previous constitution and wrote a basic 
law that suited him better. Federalism, for example, an ideal in 
Venezuela since before 1864, was rudely brushed aside whenever 
a strongman emerged in Caracas who needed to put down opposi- 
tion from local or regional chieftains. Federalism has enjoyed a more 
hospitable environment since the promulgation of the 1961 consti- 
tution, but no federalist tradition strong enough to challenge the 
continuing power of the president has yet arisen. Thus, although 
the possibility of direct election of state governors existed under 
various constitutions, the actual practice was not implemented until 
1989. 

The states are considered autonomous and equal as political en- 
tities, but their dependence on Caracas for budget allocations en- 
sures that state powers are indeed limited. On the other hand, they 
do have some symbolic powers. For example, they can change their 
names, they can organize local governmental entities, and they can 
perform a few other functions on their own. 

Although the division of powers among the executive, the legis- 
lative, and the judicial branches has been traditional in Venezue- 
lan constitutions, the executive has overshadowed the other two 
branches throughout the country's history. A greater break with 
the past came in the 1961 constitution in its painstaking elabora- 
tion of individual and collective duties and rights. No fewer than 
seventy-four articles deal with human rights and freedoms. Free- 
dom of speech, press, and religion are guaranteed. The right of 
habeas corpus is recognized, and prompt trials are ensured 
(although the cumbersome judicial system effectively thwarted the 
latter guarantee). There are also constitutional prohibitions against 
self-incrimination, torture, capital punishment, double jeopardy, 
and discrimination on the basis of sex, creed, or social condition. 



139 



Venezuela: A Country Study 

The 1961 constitution also places many social obligations on the 
state, such as responsibility regarding labor, social welfare, and 
the national economy. Working hours are specified, minimum 
wages guaranteed, and there is freedom to strike. Special protec- 
tion is provided women and minors in the labor force. 

The government has many powers and responsibilities in regard 
to national economic development. Private property and private 
enterprise are protected so long as they do not conflict with na- 
tional policies. In turn, the national government is given wide lati- 
tude in the areas of industrial development and protection of natural 
resources, and in provisions for the expropriation of property. 

It is fairly easy to amend and even rewrite the constitution. 
Amendments can be initiated by one-fourth of one of the cham- 
bers of Congress or one-fourth of the state legislative assemblies. 
An amendment requires a simple majority for passage by Con- 
gress. If passed by Congress, an amendment still requires certifi- 
cation by two- thirds of the states to become part of the constitution. 
Provisions for reforming or rewriting the constitution are similar; 
the process may be put into motion by a one-third vote by the states 
or a congressional chamber, passage by two-thirds vote in Con- 
gress, and approval by a national referendum. Rejected initiatives 
of amendment or reform may not be reintroduced during the same 
congressional term. The president may not veto amendments or 
reforms and is obliged to promulgate them within ten days follow- 
ing their passage. 

In practice, the 1961 constitution retained many features of previ- 
ous constitutions. Federalism, for example, has been the nominal 
basis of constitutional structuring since 1864. Although the 1961 
document calls Venezuela a federal state, it also labels the country 
as the ''Republic of Venezuela," whereas earlier charters used the 
term "United States of Venezuela. " 

More important, the constitution has served as the basis for ex- 
pansive government programs that fulfill the mandate for greater 
social justice and greater use of the central government in all spheres 
of public policy. Thus, in effect, the 1961 constitution expanded 
and redefined the central role to be played by government on be- 
half of the people of Venezuela; it maintained the tradition of power- 
ful presidents and a strong central state. 

The Executive 

The 1961 constitution continues the long tradition of a power- 
ful president, who serves as head of state and chief executive. He 
or she must be a Venezuelan by birth, at least thirty years old, 
and not a member of the clergy. The president is elected by a 



140 



Government and Politics 



plurality vote under direct and universal suffrage, serves for five 
years, and cannot be reelected until after two intervening terms 
have passed. President Carlos Andres Perez became the first 
Venezuelan elected to serve two terms of office under this provi- 
sion of the 1961 constitution; he won the December 1988 election 
after having served as president from 1974 to 1979. 

The president commands the armed forces, calls special sessions 
of the Congress, and exercises sole control of foreign policy. He 
can authorize expenditures outside the budget and can negotiate 
loans. The constitution provides for a weak form of ministerial 
responsibility. This responsibility is rendered meaningless, however, 
because although the constitution calls upon the president to con- 
sult with his ministers, it allows him to appoint and remove them. 
In fact, through his ministers, the president can adopt whatever 
regulations he chooses in order to implement the laws. These regu- 
lations are not subject to the approval of Congress, and the courts 
are not empowered to review them. 

The major challenges and limitations to presidential power are 
found not in constitutional restrictions but in the political system 
as defined by the major Venezuelan political parties. Limitations 
placed on presidential initiative by the play of forces within the 
president's party have restricted presidential actions informally but 
effectively; in practice, therefore, political checks have functioned 
more effectively than constitutional ones to prevent presidential 
abuses of authority. 

The constitutional power to declare a state of siege and temporar- 
ily restrict or suspend constitutional guarantees represents the ul- 
timate exercise of presidential authority under the 1961 constitution. 
During Romulo Betancourt's elected tenure (president, 1959-64), 
he felt compelled to use these constitutionally sanctioned limita- 
tions in order to prevail over forces that threatened the survival 
of his legitimately elected government. It should be pointed out, 
however, that certain guarantees cannot be constitutionally abrogat- 
ed under any circumstances. The guarantee against perpetual im- 
prisonment and the prohibition against the death penalty represent 
two such provisions. 

Cabinet and noncabinet ministers serve as advisers to the presi- 
dent; they are appointed and removed by the president without 
input from the Congress. Ministers may introduce bills in Congress, 
and they must submit an annual report and an accounting of funds 
to Congress at the beginning of each regular session. The ministers 
of energy and mines, finance, foreign affairs, interior, and national 
defense and the head of the Central Office of Coordination and Plan- 
ning (Oficina Central de Coordination y Planificacion — Cordiplan) 



141 



Venezuela: A Country Study 

traditionally have been considered the most powerful and presti- 
gious in the Council of Ministers, or cabinet. 

The president determines the size and composition of the cabinet. 
Both Betancourt and Raul Leoni (president, 1964-69), who suc- 
ceeded him as the second chief executive in the democratic period, 
appointed thirteen cabinet ministers. Since then, the number has 
grown as high as twenty-five. Some observers have noted a correla- 
tion between this increase in the number of ministries and the oil 
bonanza that began in 1973. As the oil money flowed in, the num- 
ber of ministries also increased. Subsequently, even though the oil 
boom ended in the early 1980s, presidents have found it difficult 
to operate with as few ministries as Betancourt and Leoni did. 

The growth of the cabinet was not surprising in light of the am- 
bitious list of the government's goals in the 1970s and 1980s. These 
included preserving democratic institutions, maintaining public or- 
der, modernizing the armed forces, managing the external public 
debt so as to avoid undesirable effects on living standards, and 
directing the economy and the development of the country's physical 
infrastructure. All these broad and wide-ranging goals fell within 
the president's purview and range of legislative initiatives; there- 
fore, when Venezuelans spoke of "the government," almost in- 
variably they meant "the president," or "the executive." 

Driven by this mandate, the centralized bureaucracy, under the 
control of the president, has become by far the largest employer 
in the country. Commonly cited figures on the number of public 
servants were inaccurate because they often excluded those em- 
ployed by the many state corporations, among them those dealing 
with the Venezuelan Petroleum Corporation (Petroleos de Venezuela, 
S.A. — PDVSA), the Foreign Commerce Institute, the Superinten- 
dency of Foreign Investment (Sistema de Inversiones Extranjeras — 
SIEX), and many others. 

The tremendous growth of bureaucracy provoked controversy, 
especially as oil revenues declined during the 1980s. Many Venezue- 
lans felt that the growth of bureaucracy contributed to corruption, 
fiscal irresponsibility, and a declining level of services. And yet, 
a significant number of Venezuelans worked for the government 
either directly or indirectly or had close relatives so employed. The 
Venezuelan press had been vigorous in its exposes of the most 
flagrant cases of nepotism, but authorities had seldom taken effec- 
tive action to curtail this practice. The 1989 switch to the direct 
election of governors lessened the opportunity for presidents to ap- 
point political cronies to these offices. President Perez's announced 
policy of privatization of some parts of the public sector could also 



142 



Government and Politics 



have an impact on inefficient personnel practices. Through 1990, 
however, the overall effect of these changes could not be judged. 

An early sign of Perez's intentions toward fulfilling his pledge 
of greater privatization came with the announced intention to dis- 
solve the Venezuelan Investment Fund (Fondo de Inversiones de 
Venezuela — FIV), once the most visible institutional symbol of the 
liberal application of oil revenues. Perhaps ironically, the FIV had 
been created by Perez in 1974 during his earlier presidency as a 
channel to direct the additional income generated by rocketing oil 
prices into the expansion of non-oil sectors of the economy. Allo- 
cations by the government to the FIV funded large-scale projects 
intended to boost the production of steel, aluminum, and electric- 
ity (see Growth and Structure of the Economy, ch. 3). In addi- 
tion, possibly in an effort to pave the way for an eventual bid by 
Perez to become the secretary general of the United Nations, FIV 
also channeled Venezuelan financial assistance to poor countries 
in Central America, the Caribbean, and the Andean region. 

Early in 1990, the government reallocated FIV's assets among 
various ministries. This move, however, did not necessarily repre- 
sent the demise of this powerful bureaucratic entity. Some sources 
indicated that FIV's technicians would be charged with administer- 
ing the privatization program. By late 1990, however, the privatiza- 
tion program had yet to sell a single state asset, and some observers 
questioned the strength of Perez's commitment to the process. 

The Legislature 

The constitution establishes a bicameral Congress, comprising 
a Senate and a Chamber of Deputies. Senators must be at least 
thirty years of age and deputies at least twenty-one. Both must be 
native-born Venezuelans. Each body is elected at the same time, 
with the same congressional ballot, every five years. A party list 
system of proportional representation is the method of selection for 
both chambers; voters, therefore, do not cast ballots for individual 
candidates. The only deviation in the selection of members lies in 
the fact that the Senate also includes former presidents of the repub- 
lic. The traditional provision of alternates (suplentes) allows persons 
so designated to hold the position to which a principal has been 
elected in the latter' s absence. 

Many felt that the most important unit within the Congress was 
the party caucus (fraction), made up of members of a party's elected 
delegation to either chamber. A chairman chosen by its members 
presided over the caucus. Chairmen were effectively preselected 
by their party's national central committee; balloting by the con- 
gressional delegations merely ratified the choice. 



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Venezuela: A Country Study 

Revenue, budget, and taxation bills must originate in the lower 
house, which also has the authority to censure ministers. The up- 
per house is responsible for the initiation of bills relating to treaties 
and international agreements. The Senate also approves certain 
presidential appointments to diplomatic posts and the promotions 
of high-ranking military officers (see Uniforms, Ranks, and In- 
signia, ch. 5). 

The Venezuelan constitution provides for parliamentary immu- 
nity, but this immunity may be revoked by a member's chamber. 
In 1963 the Supreme Court upheld the right of the president to 
ban political parties deemed subversive of democracy. Congress, 
however, has remained responsible for its own organization and 
regulation. Each chamber elects its own presiding officer. The presi- 
dent of the Senate serves as the president of Congress; the presi- 
dent of the Chamber of Deputies serves as the vice president of 
Congress. 

The political significance of the Venezuelan Congress has in- 
creased throughout the post- 1958 democratic era. The staffs of con- 
gressional committees handle a heavy legislative workload. Initially, 
each chamber had the same ten permanent standing committees, 
but in 1966 the Chamber of Deputies created the Committee on 
Fiscal Affairs. All other committees have continued as parallel struc- 
tures in both houses of the Congress. Two committees in each cham- 
ber deal with internal affairs and foreign relations, four committees 
with economic matters, and four others with service issues, such 
as education, tourism, and defense. 

The most important committee, however, is the Delegated Com- 
mittee. An interim body created by the 1961 constitution, it in- 
cludes the president and vice president of Congress and twenty-one 
other members selected on the basis of party representation in Con- 
gress. The Delegated Committee serves during those periods when 
Congress is adjourned; it exercises oversight functions and acts for 
Congress in its relations with the executive. It may convene Con- 
gress in extraordinary session if it deems it necessary. 

The legislature considers, debates, approves, rejects, or alters 
legislation. Congress also has the authority to question ministers 
and to have them explain adopted policies. It can censure execu- 
tive personnel, with the exception of the president. Moreover, it 
can impeach the president by agreement between the Senate and 
the Supreme Court. This has not happened since the adoption of 
the 1961 constitution, however. 

In practice, the legislature does not share equal status with the 
executive branch. The executive branch, not Congress, introduces 
most significant legislation. In addition, in certain instances, bills 



144 



Government and Politics 



may emanate from the Supreme Court; the constitution also pro- 
vides that a bill may be initiated directly by the petition of a mini- 
mum of 20,000 voters. The president has the authority to veto 
legislation, although Congress can override that veto. When a veto 
is overridden, the president may ask Congress to reconsider those 
parts of the bill he finds objectionable. 

Two senators are elected from each state and two from the fed- 
eral district. Additional members, around five or so, are selected 
by a system of proportional representation that ensures minority 
parties a voice in the legislature. Former presidents may serve as 
senators for life, if they so desire. They are considered elder states- 
men and are often consulted by their colleagues on matters of policy 
and political strategies. All other legislators are elected by univer- 
sal suffrage for five-year terms concurrent with that of the presi- 
dent. Unlike the president, legislators may be immediately reelected. 

The Judiciary 

Venezuela has no dual organization of national and state courts. 
Since 1945, all courts have been part of the federal system, even 
though at one point a parallel organization of state courts existed. 
Regardless of their form of organization, the courts have never ex- 
ercised as much influence as the executive or even the legislative 
branch in Venezuela. 

As is the case with the legislature, the judicial branch in Vene- 
zuela does not share equal status with the executive. Although the 
law provides for the process of judicial review and for coequal sta- 
tus among the three branches of government, the reality is quite 
different. The Venezuelan brand of federalism does not provide 
for state courts. The law is perceived as the same, unitary, through- 
out the national territory. Thus, all courts and virtually all legal 
officers, from those who arrest to those who prosecute, are federal 
(i.e., central government) officials. 

Broader implications stem from the fact that the Venezuelan le- 
gal system is essentially a code law system, and thus the legal sys- 
tem is relatively rigid and leaves little room for judicial discretion. 
In a system of code law, the jurist is seen as a confirmer of the 
written code rather than the finder or maker of the law, as is the 
case in common law systems. 

The highest body in the judicial system is the fifteen-member 
Supreme Court of Justice, which is divided into three chambers 
that handle, respectively, politico-administrative, civil, and penal 
matters (see fig. 8). Its members are elected by joint session of the 
Congress for nine-year terms. One-third of the membership is 
renewed every three years. Each justice is restricted to a single term 



145 



Venezuela: A Country Study 



EXECUTIVE BRANCH 



LEGISLATIVE BRANCH 



PRESIDENT 



COUNCIL OF MINISTERS 
(CABINET) 



CONGRESS 



SENATE 



1 

| CHAMBER 
I OF DEPUTIES 



NONCABINET MINISTRIES 
(MINISTRY OF TOURISM, 
CORDIPLAN*) 



Cordiplan = Central Office of Coordination and Planning 
(Offcirta Central de Coordinacion y Planificacidn) 



JUDICIAL BRANCH 



SUPREME COURT 
OF JUSTICE 



SUPERIOR COURTS 



COURTS OF 
INSTRUCTION 

I 



DISTRICT COURTS 

r~ 



MUNICIPAL 
COURTS 



COURTS OF FIRST 
INSTANCE 



Source: Based on information from Embassy of Venezuela, Washington; and Encyclopedia 
of the Third World, Ed., George Thomas Kurian, New York, 1987, 2098. 



Figure 8. Organization of the National Government, 1990 

of nine years; this short tenure effectively limits how much a 
Supreme Court justice can accomplish. 

Below the Supreme Court are seventeen judicial districts, each 
district having its own superior court. Lower courts within a judi- 
cial district include courts of instruction, district courts, municipal 
courts, and courts of first instance. The superior courts are com- 
posed of either one or three judges, a bailiff, and a secretary. They 
serve as appellate courts for matters originating in courts of first 
instance in the areas of civil and criminal law. Some deal exclu- 
sively with civil matters, others with criminal matters, and others 
with all categories of appeals. The courts of first instance are com- 
posed of one judge, a bailiff, and a secretary. They have both ap- 
pellate and original jurisdiction and are divided into civil, 
mercantile, penal, finance, transit, labor, and juvenile courts. Dis- 
trict courts are composed of one judge, one bailiff, and a secre- 
tary; they also operate nationwide. They have original jurisdiction 
in small bankruptcy and boundary suits, and appellate jurisdic- 
tion over all cases from the municipal courts. Municipal courts, 
consisting of a judge, a bailiff, and a secretary, hear small claims 
cases and also try those accused of minor crimes and misdemeanors. 



146 



Government and Politics 



They also perform marriages. Although they do not constitute courts 
as such, instruction judges issue indictments, oversee investigations 
to determine whether a case merits the attention of the courts and, 
if so, issue an arrest warrant. Thus, these judges perform a cru- 
cial task in the initial stages of all cases that come before the courts. 

In addition to the courts of ordinary jurisdiction, several courts 
of special jurisdiction operate under the Ministry of Justice. Mili- 
tary tribunals, fiscal tribunals, and juvenile courts all fall into this 
category. Although they operate independently of the ordinary 
courts, the Supreme Court also acts as the highest court of appeal 
for the special courts. Juvenile courts throughout the country try 
those under eighteen years of age. 

One of the most interesting aspects of the Venezuelan judicial 
system is its carryover of medieval Castilian traditions, such as the 
fuero militar (military privilege). Under this centuries-old tradition, 
members of the military cannot be tried by criminal or civilian 
courts, although the military has at times intruded into the civilian 
judicial system. For example, the Armed Forces of Cooperation 
(Fuerzas Armadas de Cooperation — FAC) — also known as the Na- 
tional Guard — was charged with the function of protecting all na- 
tional territory and highways. Under this broad mandate, it could 
and did prosecute contraband cases and in effect became involved 
in the criminal prosecution of many suspected civilian offenders. 
This power was likely to increase as drug contraband became a 
greater problem in Venezuela, especially along its borders with 
Colombia (see Threats to Internal Security, ch. 5). 

Generally speaking, the system for selecting judges tended to limit 
their independence. The Congress chooses the members of the 
Supreme Court, and the minister of justice names judges to the 
lower civilian courts. Neither category of judge enjoys life tenure. 
Judges' salaries are submitted to Congress as line items in the Minis- 
try of Justice's annual budget and are therefore not guaranteed. 
Thus, in a number of ways the judiciary was subordinate to and 
dependent upon the good will of the executive and the legislative 
branches. Although Venezuelan jurists occupied a highly regard- 
ed position in society, they did not hold nearly as much power as 
their counterparts in those systems where judicial review and com- 
mon law are the basic determinants of procedures. 

Public Administration 

The 1961 constitution provides for a career civil service and es- 
tablishes standards for performance, advancement, suspension, and 
retirement. The ideals, however, have been largely ignored in 



147 



Venezuela: A Country Study 

practice in favor of a system based on patronage. Scholars of pub- 
lic administration agreed that the bureaucracy was bloated, ineffi- 
cient, and often susceptible to corruption. 

The junta that assumed power after the 1958 overthrow of the 
dictator Marcos Perez Jimenez set up a Public Administration Com- 
mittee that obtained the advice and services of a number of inter- 
national experts. The committee found the Venezuelan bureaucracy 
to be unorganized and unprofessional; the experts advised the adop- 
tion of a model under which jobs were to be clearly defined, civil 
service would become divorced from politics, pay scales would be 
established within accepted guidelines, and the bureaucracy would 
faithfully follow the directives of government leaders. 

Although it became immediately apparent that most, if not all, 
of the committee's suggestions were unworkable (for example, the 
notion of a democratic government such as Betancourt's giving life 
tenure to senior bureaucrats because they had served long years 
under the Perez dictatorship), the committee was not totally a 
failure. As a result of the committee's activities, in 1959 a new Com- 
mission on Public Administration undertook the administrative re- 
form of the upper levels of the public service. The commission also 
established a school in Caracas to train career civil servants, the 
Graduate Institute of Public Administration (Instituto de Estudios 
Superiores de Administration — IESA). In spite of IESA's excel- 
lent faculty and promising graduates, most of the bureaucracy re- 
mained filled with political appointees rather than IESA graduates 
in the late 1980s. 

Cordiplan, in the Office of the President, also was created in 
1958. Cordiplan was envisaged as a central agency that would al- 
locate resources within the government and handle budgetary and 
administrative planning, all on a nationwide basis. Although Cor- 
diplan has been highly regarded and its four- and five-year plans 
have served as general guides, many of its detailed and imagina- 
tive goals for national development have been undercut by a 
bureaucracy resentful of Cordiplan 's clout in budgetary matters. 

In 1969 President Caldera charged the Commission on Public 
Administration with drafting an overall reform plan. The commis- 
sion submitted a detailed report and plan to the president in 1972, 
but its sweeping recommendations were never fully implemented. 
The effort did have some positive results, however. By the end of 
the 1960s, concepts of regular personnel procedures and civil service 
tenure had begun to take hold. During the Caldera government, 
the Central Office of Personnel branched off from the commission 
and became a force in promoting the professionalization of civil 
servants. 



148 



Government and Politics 



Carlos Andres Perez, during his campaign for the presidency 
in 1973, promised to further streamline and professionalize the 
bureaucracy. During the preceding Social Christian Party (Comite 
de Organization Polftica Electoral Independiente — COPEI) ad- 
ministration of Rafael Caldera, the bureaucracy had grown and 
many state enterprises had mushroomed. Perez reacted by creat- 
ing a separate reform commission to deal solely with state enter- 
prises; the original reform commission became a subsection of 
Cordiplan in 1977. 

Ministerial and regional reorganization plans also have been 
enacted into law, but their implementation has been minimal at 
best. Another strain was added when the oil industry was nation- 
alized in 1976, and a whole new bloc of private workers and 
managers became government employees. This move initiated a 
highly political process, as players within the political system sought 
to exploit the potential of the state-owned oil industry to provide 
money, patronage, and jobs to the well connected. Whatever the 
incentives for reform, the incentives for continued corruption almost 
invariably have proved stronger. 

In spite of its many failings, Venezuelans saw the bureaucracy 
as an integral part of a system in which service and perquisites went 
hand in hand. Politicians promised services and appointed 
bureaucrats to provide those services; the appointees themselves, 
however, more often than not owed their first allegiance to the poli- 
ticians rather than to the public. Furthermore, the bureaucracy, 
like everything else, was concentrated in Caracas; therefore it 
responded more to the needs of the center than to the demands 
of the periphery. 

Local Government 

The 1961 constitution provides for a federal republic of twenty 
states, two federal territories, a federal district, and a federal de- 
pendency consisting of seventy-two islands. Each state contains two 
levels of government, the district and the municipal level. There 
are 202 districts in the country, between 6 and 16 in each state. 
Districts are divided into municipalities and are constitutionally 
independent of the state in economic and administrative matters, 
subject only to national laws and regulations. 

Local government was not strong in Venezuela, and it can be 
argued that Venezuelans gave greater loyalty to their states than 
to their local government bodies. The 1961 constitution delegates 
the establishment of municipalities and other local entities to the 
states. The municipalities elect their own officials and may collect 



149 



Venezuela: A Country Study 

certain revenues, but they are subject to numerous legal, finan- 
cial, and political limitations imposed by national officials. 

The powers of the states are restricted to those areas not grant- 
ed to the nation or the municipalities. The states are permitted to 
merge, cede territory, or change their boundaries with the con- 
sent of the Senate. Although it had not done so by the end of 1990, 
the national Congress may, by a two-thirds vote, expand the pow- 
ers of the states to include matters previously limited to the con- 
sideration of the central government. The states have also remained 
dependent on the national government for most of their revenue. 

In 1990 the direct election of governors was still too recent to 
indicate to what extent the state executives, now with their own 
political basis, would be able to exert greater authority than they 
did as appointed officials. In any case, the governor's powers de- 
rive from his or her control of the state's law enforcement 
machinery, the drafting of the state's budget (which is submitted 
to the state legislature), and the execution of the directives of the 
national executive. Unicameral state legislative assemblies are popu- 
larly elected and exercise limited powers. 

States are divided into districts, the number of districts depend- 
ing on the size of the state. Districts are governed by popularly 
elected councils; elections for council members take place at the 
same time as those for national officials. Like all popularly elected 
officials, council members serve five-year terms. The number of 
council members varies, but all councils are presided over by a 
chairman, who serves in that position for a one-year term. The 
district councils have limited decision-making powers regarding such 
matters as the distribution of national funds channeled through the 
state executives. The councils are charged with providing the lo- 
cal services not provided by the national government. 

The districts are divided into municipalities, which are also 
governed by elected councils. The municipal councils have no 
decision-making powers and serve as administrative units in charge 
of garbage collection, sewer construction, and other municipal ser- 
vices. The councils also provide information about local politics 
to the district council and serve as advocates for local citizens with 
the national bureaucracy. In Venezuela, however, links between 
local citizens and the national government have often been more 
effectively established informally by the political parties rather than 
by the local bureaucracy. 

These links between local citizens and the national government 
might have to be redefined, however, after the Democratic Action 
(Accion Democratica — AD) party's major defeat in the December 
1989 local elections. These elections were particularly significant 



150 



Government and Politics 



because, for the first time, they involved the elections of mayors 
(a position that previously did not exist) as well as twenty state 
governors. Another innovation in these elections allowed voters to 
cast their ballots directly for the municipal councilors of their choice 
if they preferred this method to the traditional system of voting 
according to party slates. 

President Perez's AD lost gubernatorial elections in nine key 
states, including oil-producing Zulia, the industrial state of Carabo- 
bo, and the state of Miranda. The opposition made similar inroads 
at the municipal level, with 95 of the mayoral posts won by COPEI 
and 24 by other parties, as compared with AD's 150. The immedi- 
ate result of these electoral setbacks was a renewed and more vocal 
discussion about the degree to which states should be able to manage 
their own financial resources. 

The Electoral System 

The 1947 constitution guaranteed universal suffrage and direct 
elections by secret ballot, but the Perez Jimenez dictatorship 
abrogated these guarantees. Free and fair elections have been held 
regularly since 1958; voter turnout has been high, especially for 
national offices. 

Voter registration and participation in elections are compulso- 
ry for all eligible citizens. Penalties exist for failing to vote, but 
they were seldom enforced as of 1990. All citizens over eighteen 
years of age, except members of the armed forces on active duty 
and persons serving prison sentences, are eligible to vote. There 
are no literacy, property, or gender requirements for voting. 

With the exception of the president, all candidates for national 
and local offices run on lists as members of a party. Each party 
issues a party list with its more prominent members at the top. 
Candidates are elected on a proportional basis according to the num- 
ber of colored ballots cast for their party and their position on the list. 

Elections are supervised and directed by the Supreme Electoral 
Council (Consejo Supremo Electoral — CSE), which consists of thir- 
teen members chosen every two years by Congress. The CSE heads 
an electoral system composed of state, district, and municipal elec- 
toral boards. The CSE is responsible for registering eligible voters, 
operating the polling places, counting the votes, ruling on appeals 
from lower electoral boards, settling controversies between parties, 
and other electoral matters. No political party may have a majori- 
ty on the CSE or any of the lower boards. 

Presidential, legislative, district, and municipal elections are held 
once every five years. The president is elected by a simple plurali- 
ty, and congressional representatives are selected on the basis of 



151 



Venezuela: A Country Study 

a system of proportional representation for the major parties. The 
minor party representation is determined by dividing the total num- 
ber of votes cast by the total number of persons directly elected 
to calculate the number of votes necessary to award a seat to a party. 
In the 1973 elections, minority parties gained one seat in the Senate 
for each 98,491 votes they received. In this way, three parties that 
did not win Senate seats through the direct elections nevertheless 
gained a total of five seats in the upper house. In addition to the 
six parties that won seats in the Chamber of Deputies by direct 
election, six other parties were awarded seats under the quotient 
system. 

Despite efforts, such as the quotient system, that sought to accom- 
modate minority parties, the Venezuelan electorate remained loyal 
to AD and COPEI, the two major political groups that have domi- 
nated the system since 1958. In the congressional elections of De- 
cember 4, 1988, AD received 43.3 percent of the total, COPEI 
31.1 percent. The closest competitor at the polls was the leftist coa- 
lition that united the Movement Toward Socialism (Movimiento 
al Socialismo — MAS) and the Movement of the Revolutionary Left 
(Movimiento de la Izquierda Revolucionaria — MIR), which ob- 
tained 10.2 percent of the total. Small groupings of rightist and 
personalistic orientations garnered a combined total of only 7.6 per- 
cent. The balance went to a variety of very small parties; the 
Venezuelan Communist Party (Partido Comunista de Venezuela — 
PCV), attracted only 0.9 percent of the vote. 

The elections held since 1958, as a whole, have been notewor- 
thy not only for their high voter turnout, but also for the increas- 
ing sense of legitimacy they have conferred upon the winners. 
Domestic and foreign observers alike have praised Venezuelan elec- 
tions as fair and highly competitive. Over the years, as AD and 
COPEI have become the dominant political parties, a return to 
the traditional fragmentation of the Venezuelan political system 
has become increasingly unlikely. The fact that on four occasions 
before the 1990s a president from one party handed over the man- 
tle to the president-elect of another party seemed to augur well for 
a general acceptance of the democratic system. Increased legitimacy 
at home has also provided Venezuelan presidents with an interna- 
tional clout they would otherwise lack. 

The December 1989 gubernatorial and mayoral elections, 
however, might presage a certain undermining of this sense of 
legitimacy. Abstention reached a record level, with estimates sug- 
gesting that some 60 percent of the nearly 10 million registered 
voters did not cast ballots — substantially greater than the 41 per- 
cent abstention rate recorded in the previous municipal elections 



152 



Government and Politics 



held in 1984. This sense of apathy and alienation may have been 
heightened by a decline in the quality of life during 1989, by an 
unprecedented crime wave, and by a deterioration of public services. 

Political Dynamics 

Political Developments since 1958 

Venezuelan political dynamics since 1958 have centered on a 
strong commitment to the democratic "rules of the game." 
Although Venezuelans — and foreigners alike — have pointed out 
that this democratic commitment was not without its blemishes, 
few Venezuelans still spoke about the days of dictatorship as the 
golden days of their country. In general, most felt that Venezue- 
la's democracy was strong and robust, but that democracy alone 
had not brought about social justice or narrowed the gap between 
the very rich and the very poor. Indeed, the practice of democracy, 
in and of itself, was perhaps not even capable of achieving such 
goals. 

Both AD and COPEI administrations have committed themselves 
to developing coherent, overall economic and social development 
policies. Agencies such as Cordiplan were established to coordinate 
planning and contributed to rapid social and economic mobiliza- 
tion. Reform rather than revolution has been a goal of both major 
political parties. By the same token, the policy of sembrar el petroleo, 
"sowing the oil," served as a link uniting different factions within 
and between the two major parties. Even in the less affluent 1980s, 
large revenues produced by the petroleum industry continued to 
contribute to the government's ability to finance and develop am- 
bitious programs in agriculture, education, industrial diversifica- 
tion, and health. 

The nationalization of the petroleum industry in 1976, a long- 
sought goal by both major parties and practically all groups 
within Venezuela, was accomplished in a measured and tempered 
manner. Although not all parties to the nationalization accords 
agreed with every provision, most would admit that nationaliza- 
tion has worked better than many expected. Overall, it has worked 
well enough to serve as a successful model for other countries with 
some of the same developmental dilemmas as Venezuela. By en- 
suring that nationalization did not result in the drying up of for- 
eign investment and, in turn, by ensuring that petroleum revenues 
served to some extent to underwrite reform programs, Venezuela 
created a financial cushion that enabled democratic governments 
to exert primary control over the exploitation of the nation's 
resources. 



153 



Venezuela: A Country Study 

AD captured the presidency and both houses of Congress in 1973. 
Although it lost the presidency in 1978, AD remained the largest 
political party represented in the Senate and secured the same num- 
ber of seats as the second largest party (and the winner of the 
presidency), COPEI, in the Chamber of Deputies. Lesser politi- 
cal parties such as National Opinion (Opinion Nacional — Opina) 
have won a few seats (usually under ten in the Chamber of Deputies) 
in various elections since 1958. Since the reestablishment of 
democracy in 1958, however, the major blocs of senators and 
deputies have consistently belonged to either AD or COPEI. Pos- 
sibly because their parties have either held the presidency or have 
been considered potential winners of the presidency, AD and 
COPEI legislators have, in general, displayed responsibility in ad- 
hering to the political and legislative process and have not gone 
to extremes to destabilize the executive. 

Although Perez's victory in the December 1988 elections broke 
the pattern of alternating victories for AD and COPEI, his party 
lost absolute control of Congress in the legislative vote. AD's share 
of the legislative vote fell to 43.8 percent, whereas COPEI obtained 
31.4 percent, and the leftist MAS doubled its representation. Of 
a total 253 congressional seats — 204 in the Chamber of Deputies 
and 49 in the Senate — AD won with 121 seats (98 deputies and 
23 senators). COPEI won 89 seats (67 deputies and 22 senators) 
and MAS 22 seats (19 deputies and 3 senators). A center-right 
group, the New Democratic Generation (Nueva Generation 
Democratica), won seven seats (six deputies and one senator). Small 
left-wing parties obtained seven deputies, and small center-right 
factions also elected seven deputies. Although the loss of absolute 
control of Congress might restrict some of the president's initia- 
tives, overall it should represent only a minor impediment to the 
primacy of the executive. 

The most outstanding political trend evidenced by six adminis- 
trations since 1959 has been a commitment to and promotion of 
representative democracy. To many observers, the elections of 1988 
assumed particular significance because they marked thirty years 
of democracy in Venezuela and indicated that pluralist democracy 
had a strong chance to survive. The food riots in Caracas in early 
1989, which took place in spite of the overwhelming popular vote 
for the then recently inaugurated president Perez, revealed a cer- 
tain popular dissatisfaction. Opinion polls have shown that many 
Venezuelans felt as though they had little impact on their leaders 
and the way that policies were drafted and implemented. The alter- 
natives on either the right or left of the political spectrum, however, 



154 



Government and Politics 



seemed to hold little appeal, and almost no one desired a return 
to an authoritarian regime. 

AD and COPEI reforms have dramatically benefited large seg- 
ments of the population. Education and health reforms have opened 
job opportunities and improved the quality of life. Both literacy 
and life expectancy figures were among the highest in Latin Ameri- 
ca. Some other reforms, however well intentioned, have not suc- 
ceeded. Most Venezuelans admitted that their costly agrarian 
reform programs had neither provided much land to poor farmers 
nor managed to feed the nation, which continued to import sig- 
nificant levels of foodstuffs (see Land Policies, ch. 3). 

Venezuela's mixed economic picture in many ways served to 
shape its foreign policy. Venezuela was a founding member of the 
Organization of the Petroleum Exporting Countries (OPEC). This 
group brought Venezuela into high-level contact with a number 
of African countries, such as Nigeria, and with Middle Eastern 
oil producers. With the downturn of oil prices, Venezuela, like other 
once revenue-rich countries, had to face a continuing struggle to 
maintain foreign investment. 

Jaime Lusinchi (president, 1984-89) sought to retain Venezue- 
la's creditworthiness by paying the interest on its US$32 billion 
foreign debt, but was sadly disappointed when his gestures were 
not tangibly rewarded by foreign bankers. Bankers praised 
Venezuela's political courage and agreed on the country's long-term 
prospects, but they declined to approve new loans to Lusinchi' s 
government. The ensuing economic crisis forced the government 
to devalue the currency; as inflation and unemployment soared, 
Venezuelans again felt vulnerable at the hands of the 4 'multi- 
nationals." 

When President Perez assumed office in 1989, he, too, imposed 
austerity measures in an attempt to persuade foreign bankers to 
restructure the old debt and make new loans available to Venezuela. 
He achieved some initial success; austerity programs, however, have 
always proven difficult to sustain in the face of political and elec- 
toral pressure. 

Interest Groups and Major Political Actors 

Historically, the decisive arbiters of Venezuelan national poli- 
tics have been the armed forces. Three governments since the death 
of Gomez in 1935 have been overthrown by military coups. Mini- 
coups, barracks revolts, and discontent — not always fully reported — 
have also served as constant reminders to civilian politicians of the 
fragility of democracy. The armed forces have refrained from parti- 
san political matters, especially since the early 1970s and throughout 



155 



Venezuela: A Country Study 

the 1980s; they have continued, however, their involvement in 
resolving national crises and in implementing antisubversive cam- 
paigns (see Missions, ch. 5). 

Although the balance of power among contending factions since 
1958 has favored groups committed to upholding the elected govern- 
ment, a few officers from time to time have contended that they 
are the best guardians of the integrity of the constitution and the 
nation. These officers, however, have always represented a distinct 
minority and have posed no real threat to the increasing supremacy 
of the civilian leadership. In addition, democratically elected presi- 
dents have exploited interservice rivalries to survive attempted 
coups. This strategy proved particularly effective in the years imme- 
diately following 1958. Both Betancourt and Leoni survived coup 
attempts through the loyalty of military factions that failed to rally 
to the cry of revolt from other factions or branches. 

A successful strategy toward the military practiced by both AD 
and COPEI governments has been that of cooptation. Liberal 
defense budgets and generous benefits have been the norm. Poten- 
tial troublemakers were identified and sent to distant outposts or 
abroad. Generally, the military enjoyed free rein to deal with actual 
and potential subversives. Presidents have discreetly but deliber- 
ately sought the advice of military leaders in drafting and im- 
plementing major policies, especially those that affected areas that 
the military considered as "their" special prerogative, such as con- 
trol and delineation of borders. 

Unlike the military, the Roman Catholic Church has not been 
a major political force in Venezuelan politics. The church was never 
as prominent in Venezuela as it was in neighboring Colombia. In 
addition, the fact that the Spanish clergy, in general, sided with 
their mother country rather than with the forces of independence 
did not endear the church to the early Venezuelan patriots. 

Until the middle of the nineteenth century, the ranking clergy 
had close ties with the governing conservative oligarchy, and the 
church played a dominant role in the educational system. The rise 
to power of the Liberals in the latter half of the nineteenth centu- 
ry, however, ushered in a period of anticlericalism. It was not un- 
til the mid- twentieth century that, under the influence of the 
Christian social movement that began to criticize the maldistribu- 
tion of wealth, the church regained some of its former influence. 

Roman Catholic laymen played a prominent role in the found- 
ing of COPEI in 1946, and the announced disapproval of the church 
contributed to the fall of the dictator Perez Jimenez in 1958. In 
the 1960s, the involvement of the church in education and welfare 
increased, and, although the church had no formal ties with COPEI, 



156 




Military parade on the Paseo los Proceres, Caracas 
Courtesy Prints and Photographs Division, Library of Congress 



157 



Venezuela: A Country Study 



many believed that the support of clergymen and church-affiliated 
institutions contributed to the electoral successes of COPEI in 1968 
and 1978. 

The church in Venezuela has been weakened, however, by a 
traditional lack of vocations. Many priests serving in Venezuela 
were foreign-born. Charismatic Protestant churches, on the other 
hand, were beginning to proselyte successfully, especially among 
the urban poor. The Roman Catholic Church did not have the 
funds, the personnel, or the enthusiasm to stem effectively this new 
challenge to its hegemony. 

In addition to the military and the church, Venezuela's bureau- 
cracy can be regarded as a major interest group and political power 
in its own right. The adoption of far-reaching reformist goals since 
1958 has generated a proliferation of government agencies and a 
gready enlarged bureaucracy. Such entities as Cordiplan, the 
Venezuelan Development Corporation, PDVSA, the National 
Agrarian Institute (Instituto Nacional Agrario — IN A), and the Office 
of Integrated Educational Planning acquired institutional objectives 
that they actively promoted in their dealings with legislators and 
other policy makers. Overlapping authority among such entities and 
competing demands on limited resources often led to discord. 

According to estimates, the government created an average of 
about eight new state-owned enterprises each year between 1968 
and 1970. That number grew to eleven in 1971, sixteen in 1972, 
fourteen in 1973, seventeen in 1974, and nearly fifty in 1975. With 
the explosion of state-financed enterprises came an explosion of 
bureaucracy and a growing lack of accountability. Scandals were 
routinely exposed in the freewheeling Venezuelan press. By the 
end of the 1970s, few doubted that the bloated state sector was a 
major problem, and all the major presidential candidates in the 
1978 campaign promised bureaucratic reform, privatization of in- 
efficient enterprises, and greater efficiency and accountability. Once 
elected, however, candidates did not pursue their campaign 
promises with the same vigor with which they were uttered in the 
heat of the electoral campaign. 

The inefficiency and bureaucratization of the economy left it vul- 
nerable in the early 1980s to the downturn in oil prices and the 
maturation of the significant Venezuelan short-term foreign debt. 
Fiscal shortfalls threatened the financial viability of many state en- 
terprises; close to 40 percent of the country's foreign debt consisted 
of short-term obligations incurred by state-owned entities. Again, 
the government initially temporized and conducted protracted 
negotiations with international banks and financial institutions 
rather than actually beginning the painful process of reining in the 



158 



The Capitolio, home of the 
Venezuelan Congress 
Courtesy Karen Sturges-Vera 



Entrance to the Casa Amarilla, 
a government building in Caracas 
Courtesy Karen Sturges-Vera 



bureaucracy. It was not until 1989, perhaps as a result of the shock 
of the food riots and looting in Caracas that resulted in hundreds 
killed, that the government of Carlos Andres Perez began to make 
a concerted effort to move toward a leaner and more accountable 
bureaucracy. The Perez administration adopted privatization as its 
new motto; implementation, however, remained a slow, uncertain, 
and difficult process. 

Few disputed that the power of patronage was an important 
resource for cementing party loyalty and interparty relations. The 
allocation of available posts for political appointees has been an 
important factor in forming coalition governments. Furthermore, 
government employees have played a significant role in electoral 
campaigns. Although a number of individual ministries set up in- 
ternal administrative systems, and despite the numerous proposals 
set forth since 1958 for general standardization of government per- 
sonnel policies, the bureaucracy still functioned largely on the basis 
of personal contacts. 

Along with the persistence of a powerful and large bureaucra- 
cy, commercial and industrial forces have shown a great capacity 



159 



Venezuela: A Country Study 

to adapt to the democratic rules of the game and, at the same time, 
to use the government system to further their interests. These forces 
have steadily moved up to replace the traditionally dominant land- 
owning class and have transposed economic power into effective 
political power. The informal means of exerting pressure through 
family networks and social clubs have been complemented by link- 
ages forged with the various associational interest groups. Most 
of the business groups, for example, belonged to the Federation 
of Chambers and Associations of Commerce and Production (Fed- 
eracion de Camaras y Asociaciones de Comercio y Produccion — 
Fedecamaras) . It represented a great number of interests in the 
fields of petroleum, agriculture, banking, industry, commerce, and 
services. Many of its member groups, such as the Bankers' As- 
sociation, the Ranchers' and Livestock Association, the Chamber 
of the Petroleum Industry, and the Caracas Chamber of Indus- 
try, carried on large-scale lobbying of their own. In 1966, for ex- 
ample, Fedecamaras persuaded President Leoni to allow leaders 
of the business community to participate in the formulation of eco- 
nomic development policy. It has also been much involved in set- 
ting the terms under which Venezuela has entered into various 
integration and other economic pacts in the region. 

In 1962 a group of financiers and industrialists who wanted to 
participate more directly in electoral politics organized the Indepen- 
dent Venezuelan Association, whose objective was to slow the pace 
of economic reform. Another group of businessmen joined in a 
group called Pro- Venezuela, an entity opposed to foreign partici- 
pation in the exploitation of national resources; it suggested in- 
stead the use of foreign experts to train Venezuelans. 

Organized labor was the largest and most cohesive of the mass- 
based political pressure groups that had emerged since the mid- 
twentieth century. Effectively stifled under military and dictatorial 
rule, labor did not begin to affect the political balance until the 
early 1940s. Labor backed the October 1945 coup and benefited 
much from the short-lived AD government (1945-48). Unioniza- 
tion proceeded apace then, but labor failed to avert the November 
1948 coup that brought Perez Jimenez to power. 

Perez Jimenez further alienated labor by allowing the immigra- 
tion of thousands of workers from southern Europe. With the return 
to democracy in 1958, however, organized labor returned to po- 
litical prominence. All political parties vied to obtain links to labor. 
By the late 1960s, more than half of the labor force was unionized. 
The Confederation of Venezuelan Workers (Confederacion de 
Trabaj adores de Venezuela — CTV), organized by AD militants, 



160 



Government and Politics 



remained the most powerful of the labor confederations. Some of 
the more militant C TV- affiliated unions who favored severing links 
to the government split from the CTV to form the United Work- 
ers' Confederation of Venezuela. This group never challenged the 
strength of the CTV. Similarly, the Roman Catholic labor organi- 
zation, the Committee of Autonomous Unions, remained small and 
wielded little political clout (see Labor, ch. 3). 

Because of the close links between AD and the CTV, the CTV 
has suffered corresponding splits when AD has been divided. In 
the 1960s, divisions in AD were reflected in contests for CTV leader- 
ship. From time to time, members of COPEI have won certain 
important leadership posts in the CTV, but AD has remained the 
major political force. 

Students and universities traditionally have been involved in the 
political process in the twentieth century. Betancourt, Leoni, Vi- 
llalba, Machado, and other members of the Generation of 1928 
were student leaders who dared to openly challenge the dictator- 
ship of Gomez. COPEI itself traced its origins to the National Stu- 
dents Union, created in 1946 to defend the Roman Catholic Church 
and to oppose the Marxist-oriented Venezuelan Student Federa- 
tion (Federation Estudiantil de Venezuela — FEV). FEV leaders 
took part in the protests against Perez Jimenez and worked closely 
with the underground Patriotic Junta in the final push against the 
dictator in January 1958. 

When Betancourt assumed the presidency in 1959, student 
groups participated actively in the establishment of a democratic 
government. Shortly thereafter, however, many of them became 
disillusioned with what they perceived as the slow pace of reforms 
and moved toward the left politically. Some, attracted by the Cuban 
model, took up arms in abortive attempts to wrest control of the 
government from Betancourt and the AD reformers. 

Of all the national universities, the Central University of 
Venezuela, in Caracas, has been the major focus of student politi- 
cal activity. Most of the student groups at the university were linked 
with national political parties, but often the student branches func- 
tioned quite independently in their actions and took much more 
radical stands than did the parties. Students made up a considera- 
ble proportion of the membership of MIR, which split off from 
the AD in 1960, and its militant revolutionary band of irregulars, 
the Armed Forces of National Liberation (Fuerzas Armadas de 
Liberation Nacional — FALN) (see The Triumph of Democracy, 
ch. 1). 

The middle class has had a significant impact on government 
policies in the democratic era. The middle-class origins of most 



161 



Venezuela: A Country Study 

AD and COPEI leaders helped generate support for their party 
programs. Many of the new economic elites that have grown up 
as a result of the benefits produced by the petroleum bonanza had 
their origins in the middle sectors and generally advocated liberal 
democracy and public-sector involvement in the economy. With 
the downturn of oil revenues in the mid-1980s, this mentality be- 
gan to change somewhat as the government, as well as the middle 
sectors, considered the potential advantages of privatization. 

Political Parties 

Contemporary Venezuelan political parties evolved from the stu- 
dent groups formed at the Central University of Venezuela in the 
capital during the long years of the Juan Vicente Gomez dictator- 
ship. The most prominent of these groups was the FEV. Not sur- 
prisingly, the aging dictator swiftly dispatched into exile some of 
the young leaders of these protests. Abroad, they formed links with 
activists of similarly democratic inclinations. Other leaders who 
avoided exile established the bases of clandestine partisan organi- 
zations, the most important of which was the Republican Nation- 
al Union (Union Nacional Republicana — UNR). Shortly after 
Gomez's death in 1935, these exiled leaders returned, and a spate 
of new political groups emerged. 

Many of the former student leaders helped launch the Venezuelan 
Organization (Organizacion Venezolana — Orve); the more radical 
elements coalesced around the Progressive Republican Party (Par- 
tido Republicano Progresista — PRP), a Marxist group. The UNR 
mostly attracted young businessmen, while the Democratic Na- 
tional Bloc (Bloque Democratico Nacional — BDN) was primarily 
a regional organization centered in Maracaibo. The Orve, the PRP, 
and the BDN decided to join forces and, with the remnants of the 
old FEV, formed the National Democratic Party (Partido Demo- 
cratico Nacional — PDN). Novelist Romulo Gallegos ran under the 
PDN banner in the 1941 presidential election against government 
candidate Isaias Medina Angarita. Although Medina's victory was 
a foregone conclusion, as president he did open up the system some- 
what, enabling the opposition, under the banner of AD, to make 
common cause with a reformist faction of the military to launch 
a crucial experiment in democracy between 1945 and 1948. 

The trienio (see Glossary) was a time of great political ferment 
during which two former leaders of the Generation of 1928 came 
to the fore. Jovito Villalba called his political group the Democratic 
Republican Union (Union Republicana Democratica — URD), and 
Rafael Caldera founded COPEI. AD also began organizing labor 
and peasant leagues during this period. Although Betancourt was 



162 



Colonial-style church, Caracas 
Courtesy Karen Sturges-Vera 




the undisputed AD leader, he and others felt compelled to put for- 
ward Gallegos as their presidential candidate in the late 1947 
elections. 

Gallegos won overwhelmingly, but his political inexperience con- 
tributed to his overthrow less than a year later. During the reign 
of Perez Jimenez (president, 1948-58), political activities were 
banned, political groups once again had to go underground, and 
political leaders such as Betancourt once more went into exile. The 
ten-year hiatus, however, allowed the Generation of 1928 to ma- 
ture and to deepen its understanding of Venezuelan political and 
economic problems and realities. After 1958 many of the old or- 
ganizations revived and reestablished themselves. AD and COPEI 
went on to hold the presidency a number of times, and Villalba 
made several runs for the office. 

Several other political parties and organizations also were ac- 
tive in 1990. National Opinion, formed in 1958, won three seats 
in the Chamber of Deputies in 1983 and placed fifth in the presiden- 
tial elections. New Democratic Generation, a small conservative 
group formed in 1979, managed to elect one senator and six deputies 
in 1988. In January 1989, it merged with two smaller groups, For- 
mula One and the Authentic Renovating Organization, under the 
name of the Venezuelan Emergent Right. The Venezuelan Com- 
munist Party (Partido Comunista de Venezuela — PCV), proba- 
bly the oldest political party in the country, had functioned under 



163 



Venezuela: A Country Study 

the same name since 1931. Accused of involvement in subversive 
movements that threatened the new democracy, the PCV was 
banned for several years beginning in 1962. MAS originated as 
a radical left-wing faction that split off from the PCV in 1971. In 
the 1970s, MAS became the Venezuelan counterpart of "Eurocom- 
munist" parties. In the 1988 presidential election, the MAS's 
nominee, Teodoro Petkoff, came in third, after the AD and the 
COPEI candidates. Still smaller organizations, most of them former 
factions of the major political parties, included New Alternative, 
the United Vanguard, the Revolutionary Action Group, the Rad- 
ical Cause, the People's Electoral Movement (Movimiento Elec- 
toral del Pueblo — MEP), the Independent Moral Movement, the 
People's Advance, the Socialist League, and the Party of the 
Venezuelan Revolution. 

The most noteworthy aspect of Venezuelan party politics, 
however, was not the proliferation of small parties, but rather the 
fact that two parties, AD and COPEI, have been the major con- 
tenders for power for over three decades. The competition between 
these two democratic and pragmatically reformist parties gave the 
Venezuelan political system a great deal of stability; and although 
the other contenders contributed fresh ideas and at times brilliant 
leaders, AD and COPEI managed to occupy the broad center, 
where most Venezuelan voters felt most comfortable. 

Formal and Informal Dynamics of Public Policy 

Venezuelan public policies reflected the strong contrasts between 
the goals expounded by practically all major political parties and 
policy actors and the reality of their implementation. The consti- 
tution provides for access of the people to the government, prin- 
cipally via elections; but in its daily operation those with links to 
powerful groups, such as labor unions and business groups, en- 
joyed an undeniable advantage in influencing policy formulation. 
These groups therefore benefited more often and more directly from 
government policies. 

It was not so much that a limited number of families controlled 
the system. Venezuela long ago ceased to be a rural society in which 
a few landowners could pick the president and run the country. 
Rather, through the sophisticated use of the system, certain politi- 
cians and political groups achieved a greater say in policy making. 
Through their various branches, the political parties served as con- 
duits for both policy demands and implementation. Thus, when 
agrarian reform policies figured prominently in AD's programs, 
peasant leagues affiliated with the party exercised considerable 



164 



Government and Politics 



influence in the formulation and implementation of reforms. These 
groups also benefited inordinately from these reforms. 

This was not to say, however, that certain groups held exclu- 
sive access to government and to policy makers. Under the 
Venezuelan democratic system, various groups participated in the 
overall process. The system was less than totally open, however, 
in that certain groups had greater input in the policy-making 
process, depending on the issues or the status of the group. Thus, 
even in the modern era of civilian governments, the military would 
hold veto power in certain policy areas, such as border control or 
the pursuit of terrorists (see Role of the Military in National Life, 
ch. 5). In the formulation of economic policy, both the major labor 
unions and the major business groups affected would be heard at 
the highest levels of government, where compromises and deals 
were struck and the political parties and leaders would attempt to 
preserve their influence among competing constituencies. 

The caution and political moderation resulting from the trienio 
and the harsh decade of dictatorship that followed served as a back- 
drop to the dynamics of policy making in Venezuela. The high 
hopes and radical reforms of the trienio came to naught because 
too many groups felt threatened; the memory of that period served 
to deter political actors from pushing too far in one or another public 
policy area. Both AD and COPEI reinforced this moderating in- 
fluence by according each other a certain level of participation in 
policy making and policy implementation. 

The Mass Media 

The country's first newspaper, the Gaceta de Caracas, appeared 
in 1808, shortly after the arrival of the first printing press and just 
before the war of independence. The Gaceta de Caracas, published 
by a small group of young intellectuals who advocated a complete 
break with Spain, presented lively and well-informed discussions 
of the new political theories emanating from Europe as well as of 
local news. Around the time of independence and shortly there- 
after, a number of newspapers appeared in Caracas, and by 1821 
the Correo Nacional was being published in Zulia. 

These papers emphasized serious political discussions, establish- 
ing a tradition that continued during the Conservative- Liberal con- 
troversies of the mid-nineteenth century. The literate population 
of the time, however, was small. With extremely limited reader- 
ship and often extremely small budgets, many of these newspapers 
disappeared after a few initial, enthusiastic issues. An exception 
was La Religion, founded in 1890 and still published in 1990. 



165 



Venezuela: A Country Study 

From early on, Caracas was the undisputed center of influence 
and the home base of the most significant newspapers. Maracaibo 
was a strong center for publication of newspapers, but their circu- 
lation and impact were still regional in scope. Whether in Cara- 
cas, Maracaibo, or outlying areas, newspapers depended heavily 
on direct and indirect government and/or partisan subsidies. 
Government advertising, in addition, represented a substantial part 
of the papers' income. 

Only a few families owned and controlled the largest dailies. Fam- 
ily members usually held top administrative positions and often 
contributed articles. Perhaps the most prominent of these families 
were the Capriles, who owned a chain of morning and afternoon 
dailies, in addition to magazines and radio and television interests. 

All the major parties maintained official party newspapers, most 
of them weeklies. Some parties, especially those of the extreme right 
and extreme left, published newspapers without necessarily iden- 
tifying their true ownership and control. Organized labor, busi- 
ness, and other major political and economic groups all traditionally 
produced their own weekly or monthly publications. 

Most observers agreed that the Venezuelan media were often 
sensationalist, and that they exhibited a healthy dose of skepticism 
toward grandiose government plans. Newspapers and journalists 
assiduously pursued corruption stories and exposed cases of un- 
bridled nepotism, corruption, and incompetence. Venezuela's press 
was subject to censorship in times of emergency but was otherwise 
among the freest in Latin America. About the only consistent ta- 
boo was the publication of cartoons or other graphics that denigrated 
the national hero, Simon Bolivar Palacios. 

The major Caracas newspapers in 1990 included Ultimas Noticias, 
an independent newspaper with a daily run of 320,000 copies; Meri- 
diano, with 300,000 copies; and El Mundo, El Nacional, and Diario 
2001, all independent dailies with a circulation of approximately 
150,000. El Universal, which used to be among the top Caracas 
dailies, had fallen to a circulation of 140,000 by 1990. Still influen- 
tial, though of much smaller circulation, were Panorama and La Cri- 
tica of Maracaibo and El Diario de Caracas. The Daily Journal, an 
English-language newspaper in Caracas, had a print run of about 
20,000 copies. 

Venezuela had no domestic news agency, but several foreign 
agencies maintained offices in Caracas, among them the Italian 
News Agency (ANSA), Associated Press (AP) and United Press In- 
ternational (UPI) from the United States, Reuters from Britain, and 
TASS from the Soviet Union. The Ministry of Transport and Com- 
munications regulated broadcasting; the Venezuelan Chamber of 



166 



Government and Politics 



the Broadcasting Industry (Camara Venezolana de la Industria de 
Radiodifusion) exercised oversight functions. Most of the coun- 
try's approximately 180 radio stations were commercial, but the 
government did operate the Radio Nacional network. The coun- 
try had 6.7 million radio receivers in 1986 and approximately 2.8 
million television sets. Both government and commercial compa- 
nies operated television stations. The Venezuelan government took 
advantage of this extensive radio and media network to inform its 
people, particularly those who lived far away from major urban 
centers, on educational, agricultural, and civic matters. Stations 
were concentrated in Caracas, but transmitters were found through- 
out the country. 

Probably even more so than elsewhere in Latin America, television 
was an established medium. The country had over sixty television 
stations organized into five networks: two owned by the govern- 
ment, two commercial, and one directed by the Roman Catholic 
Church. Telecasts began in 1953 on the government-owned Tele- 
visora Nacional. The first private commercial station, Venevision, 
opened a few months later, followed by another private station, Radio 
Caracas Television. These two became national networks and were 
soon joined by the government-owned Venezuelan Television Net- 
work and a station directed by the Roman Catholic Church. All had 
excellent facilities and generally broadcast programs of high quali- 
ty. Television continued to be extremely popular at all social levels 
and to represent a status symbol for the rural and urban poor. 

Foreign Relations 

Former President Luis Herrera C ampins effectively described 
Venezuela's position in the world when he stated that, "Effective 
action by Venezuela in the area of international affairs must take 
key facts into account: economics — we are a producer-exporter of 
oil; politics — we have a stable, consolidated democracy; and 
geopolitics — we are at one and the same time a Caribbean, Andean, 
Atlantic, and Amazonian country." After the emergence of a 
democratic system in 1958, a number of Venezuelan presidents 
stated the basic principles that guided their foreign policy. These 
principles included respect for human rights, the right of all peo- 
ples to self-determination, nonintervention in the internal affairs 
of other nations, the peaceful settlement of disputes between na- 
tions, the right of all peoples to peace and security, support for 
the elimination of colonialism, and a call for significantly higher 
export prices for developing countries' primary products, especially 
oil. Throughout its history, Venezuela's foreign policy also has been 



167 



Venezuela: A Country Study 



Caribbean Sea 



o & 




COLOMBIA 

Bogota 



International boundary 
National capital 

Part of Guyana claimed 
by Venezuela 



Disputed maritime area, 
Venezuela-Colombia 

250 Kilometers 



250 Miles 



BRAZIL 



Boundary representation 
not necessarily authoritative 



Figure 9. Boundary Disputes, 1990 



infused with Simon Bolivar's ideal of promoting the political and 
economic integration of Latin America. 

In the democratic era, Venezuela has attempted to fulfill these 
principles through a variety of means. It maintained active mem- 
bership in the United Nations (UN) and its related agencies, OPEC, 
the Organization of American States (OAS) and its related enti- 
ties, the Latin American Integration Association, and a host of other 
world and hemispheric organizations. In all these forums, Venezue- 
la consistentiy aligned itself with other democracies. Although 
Venezuela has been particularly active in the Caribbean area, its 
foreign policy also has global dimensions. 

The first two presidents of the democratic era, Romulo Betan- 
court and Raul Leoni, took courageous stands against tyrannies 
of the right and the left. Although motivated in part by idealism, 
these foreign policy positions also responded to the pragmatic need 
to defend the nascent democracy from foreign intervention. Both 
presidents saw their country repeatedly subjected to propaganda 



168 



Government and Politics 



attacks and actual armed incursions directed or inspired by Cuban 
leader Fidel Castro Ruz. Although Betancourt and Leoni took a 
particularly harsh line against Cuba, they expressed equal criti- 
cism of the right-wing dictator Rafael Leonidas Trujillo Molina 
of the Dominican Republic, who nearly succeeded in engineering 
Betancourt 's assassination in June 1960. The Betancourt Doctrine, 
whereby Venezuela refused to maintain diplomatic relations with 
governments formed as a result of military coups, was adhered to 
by both administrations. Although the doctrine was much praised, 
it gradually isolated Venezuela as most other Latin American na- 
tions became dominated by nonelected regimes. Slowly but surely, 
the doctrine was modified in the late 1960s and early 1970s, allow- 
ing for the reestablishment of diplomatic relations with Argenti- 
na, Panama, Peru, and most communist countries. In December 
1974, President Rafael Caldera announced the normalization of 
relations with Cuba. 

Relations with neighboring Guyana have been strained for decades 
by Venezuela's claim to all territory west of the Essequibo River, 
more than half the present size of Guyana (see fig. 9). A 1966 tripartite 
agreement in Geneva established a Guyana- Venezuela commission 
to discuss the dispute. In 1970 President Caldera agreed to a twelve- 
year moratorium on the issue. The dispute was, with the concur- 
rence of both parties, referred to the UN secretary general in March 
1983 for a determination of an appropriate means for setdement. 

There appeared to be some prospect for improved relations be- 
tween the two countries during the 1990s. One auspicious indica- 
tion of this was the talks between the foreign ministers, held both 
in Venezuela and Guyana, in early 1990. The ministers not only 
discussed the lingering territorial question, but also committed their 
governments to greater cooperation in a number of fields, including 
energy and health. Guyana has expressed interest in importing elec- 
tricity from Venezuela's mammoth Guri Dam; both countries shared 
concern over the control of tropical diseases. 

Relations with Colombia have also been intermittendy tense dur- 
ing the last half of the twentieth century. Caracas and Bogota have 
been engaged in a long dispute regarding sovereignty over the Golfo 
de Venezuela (or the Golfo de Guajira, as the Colombians refer to 
it). Tensions arising from the dispute contributed to a high-level mili- 
tary alert following the intrusion of a Colombian ship into Venezue- 
lan territorial waters in August 1988. Both countries managed to back 
away from the brink of open conflict over the incident; in March 
1989, the two presidents met at the border to discuss this and other 
points of contention, most of which arose from the closely linked fron- 
tier economies along the vast land border. Venezuelans consistendy 



169 



Venezuela: A Country Study 

assumed that most Colombians living in their country were in- 
documentados (undocumented or illegal aliens) and routinely accused 
them of a variety of crimes, real or imagined. 

A constructive outcome of the presidents' meeting at the border 
in 1989 was the creation of a five-member international concilia- 
tion commission, headed by Adolfo Suarez Gonzalez, the former 
Spanish prime minister, and including, among others, two former 
Latin American presidents. Three bilateral commissions were also 
established to study specific issues. The intensification of drug 
trafficking added a new urgency to better cooperation between the 
two countries. Most observers believed that relations improved after 
1989 and that intergovernmental cooperation in controlling nar- 
cotics trafficking and guerrilla activities along the border expanded. 
Colombian president Cesar Gaviria used the occasion of his Au- 
gust 1990 inauguration to meet with President Perez and to recon- 
firm Colombia's commitment to the agreements signed by the 
border commissions. For his part, Perez stressed the need to con- 
tinue regular meetings between the two heads of state in order to 
maintain coordinated efforts not only on the resolution of border 
issues but also in the formulation of regional foreign policy and 
economic integration efforts. 

Under the first Perez administration (1974-79), Venezuela 
provided materiel, support, and advice to the Sandinista National 
Liberation Front (Frente Sandinista de Liberacion Nacional — 
FSLN) during its struggle to oust the dictatorship of Anastasio 
Somoza Debayle in Nicaragua. President Herrera, who subsequendy 
led the Andean Common Market (Ancom; see Glossary) efforts for 
a peaceful transition of government in that Central American na- 
tion, became increasingly disenchanted with mounting political 
repression under the Sandinistas. In 1983 Venezuela joined with 
Colombia, Mexico, and Panama to seek a regional solution to Cen- 
tral America's problems through the Contadora Group (see Glos- 
sary) process. In his second administration, Perez helped to push 
the Sandinistas into allowing the democratic elections of February 
1990, in which opposition candidate Violeta Barrios de Chamorro 
defeated Daniel Ortega of the FSLN and became Nicaragua's 
president. 

Venezuela bolstered its commitment to Chamorro 's government 
by sending nearly 1 ,000 soldiers to participate in the UN peacekeep- 
ing mission in Nicaragua. This was the first time that Venezuela 
had sent troops outside the country to demobilize warring factions. 
In a more traditional vein, Venezuela also cancelled Nicaragua's 
US$143 million oil debt and resumed oil shipments to the Central 



170 



President Carlos Andres Perez appears with President George Bush 

during a visit to Washington. 
Courtesy The White House 

American country. Venezuela had suspended its oil trade with 
Nicaragua in 1982 as a result of that nation's default in paying 
its oil import bill; the cutoff was also intended to signal Venezue- 
la's disappointment with the lack of progress toward democratic 
government in Nicaragua at the time. 

Apart from their differences in relation to Nicaragua and 
Venezuela's strong support of Argentina during the 1982 Falk- 
lands/Malvinas conflict, relations with the United States have been 
generally close. The minor tensions between the two countries have 
been exacerbated by trade issues; Venezuela's main objections in 
this regard concerned United States import policies, which, in the 
Venezuelans' opinion, raised excessive barriers to Venezuelan 
products. Also in the economic sphere, the fact that most of 
Venezuela's foreign debt was owed to United States banks repre- 
sented a major point of continuing contention between the two 
countries. 

From the United States perspective, Venezuelan efforts at eco- 
nomic reform under President Perez provided opportunities for an 
expansion of ties, particularly in the area of foreign investment. 
To the surprise of many analysts, Perez, who in his first administra- 
tion (1974-79) assumed a cool, almost hostile stance toward foreign 



171 



Venezuela: A Country Study 

investment, proved much more favorably disposed to foreign cap- 
ital in his second term. His administration removed previous limi- 
tations on the remittance and reinvestment of profits by foreign 
companies. The government also approved majority foreign con- 
trol of companies in several sectors previously closed to foreign in- 
vestment, such as public services, domestic transportation, and 
export services. Although the administration hinted at the possi- 
bility of foreign participation in oil exploration and refining, it did 
not immediately enact such measures. After decades of restrictions, 
however, the new regulations generally opened the local capital mar- 
ket to foreign companies and promised a reduction in the govern- 
ment's discretionary interference in foreign investment decisions. 

Because of its long democratic tradition, as well as its support 
for democratic institutions in other countries, Venezuela was 
respected and considered a leader among the Latin American na- 
tions. It maintained good relations in the Third World, although 
it had few commercial or other close ties with Third World na- 
tions. Venezuela also maintained relations with the Soviet Union 
and the countries of Eastern Europe and strongly supported the 
political openings there beginning in the late 1980s. In many ways, 
Venezuela often felt as close to Western Europe as it did to the 
United States, but the nature of these relations changed according 
to who held power in Caracas: AD administrations tended to pur- 
sue close ties with the socialist and social-democratic parties and 
governments in Europe; COPEI governments established close ties 
with the Christian democratic and more centrist parties and govern- 
ments of Europe. 

Venezuela's domestic breakthrough in 1958 to a functioning 
democratic system was soon reflected in the conduct of its foreign 
policy. As that system grew stronger, and as the nation's econom- 
ic status improved along with rising oil prices in the 1970s, Venezue- 
la's role on the world stage became a more prominent one. 
Venezuela was a founding member of OPEC and has exercised 
a responsible role within that organization. Outside of OPEC, 
Venezuela acted during the 1980s to supply oil to the emerging 
democracies in the Caribbean in an effort to ease the burden of 
these often heavily indebted nations. Venezuelan diplomacy also 
vigorously supported the establishment and strengthening of 
democracy in the Dominican Republic and in Central America. 
As a member of the Contadora group of nations dealing with the 
Central American crisis of the mid-1980s, Venezuela advocated 
the establishment of democratic systems and procedures in the 
region as the most beneficial solution both for the countries involved 
and for Venezuela's own political and economic interests in the 



172 



Government and Politics 



region. In the UN, the OAS, and other Third World forums, 
Venezuela has consistently sought to advance the same basic goals, 
namely democracy and development. 

The future course of Venezuela's foreign policy, regardless of its 
direction, will undoubtedly depend upon the status of these two fac- 
tors: the stability of the governmental system and the state of the 
national economy. The nation's commitment to the overarching prin- 
ciple of representative democracy appeared to be unalterable. 

* * * 

Venezuela has been the focus of several careful political analyses 
and studies in English. Among the major titles are John D. Martz 
and David J. Myers's Venezuela: The Democratic Experience, Enrique 
A. Baloyra and John D. Martz's Political Attitudes in Venezuela, and 
David J. Myers's Venezuela's Pursuit of Caribbean Basin Interests: Im- 
plications for U.S. National Security. Significant volumes on more 
specific topics include Robert J. Alexander's Romulo Betancourt and 
the Transformation of Venezuela, David Eugene Blank's Venezuela: Pol- 
itics in a Petroleum Republic, The Nationalization of the Venezuelan Oil 
Industry by Gustavo Coronel, Political Mobilization of the Venezuelan 
Peasant by John Duncan Powell, and Luis Vallenilla's Oil: The Mak- 
ing of a New Economic Order. (For further information and complete 
citations, see Bibliography.) 



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Chapter 5. National Security 



i; 




Venezuelan weaponry: F-16 fighter, Constitution- class attack craft, and 
AMX-13 light tank 



BY 1990 VENEZUELA REPRESENTED one of the few Latin 
American countries where a democratic system had produced a 
military institution that exerted little or no direct influence on the 
government. When civilian government returned in 1958, the mili- 
tary had been thoroughly discredited in the eyes of the public by 
the performance of the venal and reactionary regime of Marcos 
Perez Jimenez. This rejection of the military strengthened the ap- 
peal of civilian politicians, raised the profile of reformist officers 
within the armed forces, and deterred coup plans by isolated sec- 
tors of the officer corps. In short, the return to democracy symbol- 
ized a social consensus that supported the concept of civilian control 
over an apolitical military. 

Until Romulo Betancourt's 1959 inauguration, with the excep- 
tion of the brief trienio (see Glossary) period of 1945-48, Venezuela 
had been ruled by a succession of military-based caudillos stretch- 
ing back to "The Liberator" himself, Simon Bolivar Palacios. The 
nation exhibited all the characteristics of a traditional society — an 
agricultural economy, a small economic and political elite, and 
militarism — until the oil industry developed in earnest after World 
War II. The changes wrought by the influx of oil revenue eventu- 
ally altered the military institution as much as the society as a whole. 

Under a succession of democratically elected presidents, the mili- 
tary improved its capabilities and expertise. It also enhanced its 
public image. Although defense ministers and other leaders still 
felt compelled to deny occasional rumors of a coup, such rumors 
appeared to have no serious basis. And despite popular disillusion- 
ment with the economic performance of civilian administrations, 
there was no indication that Venezuelans would support a return 
to military rule. Democracy in Venezuela was institutionalized, 
and no serious threats to its survival, from within or without, were 
evident. 

History of the Armed Forces 

During the colonial era, Spain employed only a small army in 
the area later known as Venezuela. It relied primarily on an 
elaborate militia system that recruited members of the local popu- 
lation to maintain public order and guard against foreign attack. 
Militiamen generally were not professional soldiers; they held 
civilian occupations and met for drill on Sundays, for monthly in- 
spections, and to keep watch on their local communities perhaps 



177 



Venezuela: A Country Study 

one evening a month. The militiamen received a token salary from 
the crown; service in the militia, however, represented a source 
of prestige, primarily because of the fuero militar (military privilege), 
which exempted all active militiamen from criminal or civil prose- 
cution and from certain taxes and community work assignments 
that were obligatory for other citizens. 

By 1810 the colony had several thousand active militiamen. These 
men provided the bulk of the armed force for the independence 
struggle against Spain that occupied Venezuela for the next twenty 
years. Many thousands lost their lives as Venezuelans played a 
dominant role in winning the independence not only of their own 
future country, but also of Colombia, Ecuador, Peru, and Bolivia. 
This achievement and the Venezuelan origins of several of the 
greatest leaders of the revolutionary period — including Francisco 
de Miranda, Simon Bolivar, and Jose Antonio Paez — remained 
sources of national pride for most Venezuelans (see The Epic of 
Independence, ch. 1). 

The militiamen made themselves into a regular army during the 
independence struggle. After 1830, however, a wave of antimili- 
tary sentiment led to the army's being relegated to a small and 
comparatively unimportant local security force, a status it retained 
until the twentieth century. For the bulk of the nineteenth century, 
successive governments reverted to the old colonial militia system 
to provide the nation's primary armed force. The nineteenth cen- 
tury was the age of the caudillo in Latin America, and in no other 
country was caudillismo (rule by local strongmen, or caudillos) more 
pronounced than in Venezuela (see A Century of Caudillismo, ch. 1). 
Despite its militaristic trappings, however, caudillismo in Venezuela 
was more a manifestation of personalistic loyalties than martial aspi- 
rations. The employment of personal armies by caudillos rendered 
the regular standing army superfluous. In 1872 the federal troops 
were dismissed entirely. 

Venezuela did not reestablish a truly professional army until 
World War II. The transition, however, began under Cipriano 
Castro (president, 1898-1908). Although otherwise a mediocre and 
ineffective caudillo, Castro made one important contribution to 
Venezuelan politics; he established, on a permanent basis, a cen- 
tral authority with sufficient strength to resist all regional challenges 
to its existence. Whereas earlier caudillos had viewed the develop- 
ment of a strong national army as a threat to their personal con- 
trol over the country, Castro recognized that a professional armed 
force could function as an effective guarantor of presidential rule. 
x\mong his innovations were the creation of a general staff and a 
chain of command that extended to the commanders of each state 



178 



National Security 



and local contingent. Castro charged these commanders with forcing 
local caudillos to submit to his authority. The national army granted 
commissions to most of those who pledged their loyalty and defeated 
those who resisted. Castro also established the Military Academy 
in Caracas, at least on paper, in 1903. The academy did not open 
until 1910, however, two years after Juan Vicente Gomez (1908-35) 
had seized power from an ailing Castro. 

Gomez built on the military policies established by Castro. 
Although the opening of the academy, the introduction of foreign 
military training missions, and the procurement of modern arma- 
ments brought progress in the development of professional mili- 
tary capabilities, Gomez's most significant achievement was the 
abolition of the militia system via a 1919 decree. That act signaled 
the end of the age of caudillismo and the beginning of the age of 
Venezuelan militarism. Without a militia, soldiers could gain power 
only from within the ranks of the national army. 

Although he improved the capabilities of the army, Gomez never 
intended to establish a truly professional, apolitical force. Rather, 
Gomez's army served to enforce the preeminence of the tradition- 
al elite by preserving order, quelling opposition, and breaking 
strikes. After the oil industry became established, Gomez used some 
of its revenues to purchase modern materiel for the army in order 
to help preserve a climate of domestic security conducive to con- 
tinued and expanded foreign investment. The bulk of the increased 
revenue from oil, however, went not to the army, but to Gomez 
himself. 

After Gomez's death in 1935, Venezuela was ruled first by his 
minister of war, General Eleazar Lopez Contreras (president, 
1936-41), then by Lopez's minister of war, General Isafas Medi- 
na Angarita (president, 1941-45). Both of these presidents en- 
couraged the military to move away from direct involvement in 
politics and toward a more professional role, namely the defense 
of the country's borders and the maintenance of public order (see 
The Transition to Democratic Rule, ch. 1). Castro had first brought 
foreign military missions to Venezuela in the late nineteenth cen- 
tury; succeeding governments maintained this tradition. Venezue- 
lan officers also began to study abroad, in military academies in 
Peru, France, and the United States. The military also established 
social welfare measures during this period, as well as a mutual aid 
fund for officers. Military equipment purchases also modernized 
the services from a technical aspect. The officer corps, however, 
continued to be dominated by officers from the Andean state of 
Tachira, the home state of Castro, Gomez, Lopez, and Medina. 



179 



Venezuela: A Country Study 



This cliquishness rewarded origins more than professional com- 
petence, to the detriment of the corps as a whole. 

It was not until near the end of the Medina regime that for the 
first time a maximum retirement age was set for all military per- 
sonnel. But the action came too late; such tardy half-measures 
toward professionalizing the military provoked resentment among 
junior officers, which eventually split the military. In mid- 1945, 
junior officers founded a secret lodge, the Patriotic Military Un- 
ion (Union Patriotica Militar — UPM), which endorsed the estab- 
lishment of democratic representative government in Venezuela, 
supported by an apolitical military. One of the principal founders 
of the UPM was Marcos Perez Jimenez, then a captain. Other 
prominent figures were majors Carlos Delgado Chalbaud and Julio 
Vargas. 

The UPM conspired with members of the political party 
Democratic Action (Accion Democratica — AD) to bring about this 
new order. Thus, after the successful military rebellion of October 
18, 1945, the seven-man ruling junta was made up of four adecos 
(AD members), two military officers, and one independent. Major 
Delgado was the senior officer on the junta. The leading figure 
on the junta, however, was AD leader Romulo Betancourt. Romulo 
Gallegos, who was not a junta member, ran for and won the 
presidency in 1947 on the AD ticket. 

During the trienio of civilian rule, the military enjoyed relative 
autonomy in dealing with its own institutional affairs. In turn, 
officers did not involve themselves in social or economic policy mak- 
ing or in routine political decisions. Nevertheless, the armed forces 
were among the principal beneficiaries of the 1945 rebellion; from 
1945 to 1947, the defense budget tripled, salaries rose dramatically, 
and materiel procurements increased substantially. Enrollment in 
the Military Academy more than doubled, and a large United States 
military mission arrived, making the United States the major for- 
eign influence on the Venezuelan military. The navy was reor- 
ganized and the air force was granted autonomy from the army. 
The young officers now in charge also decided to cashier all officers 
who had attained ranks above major before the 1945 rebellion, thus 
leaving room for professionally trained officers to fill the upper 
ranks. 

Despite these concessions and considerations, the AD govern- 
ment proved unable to retain the loyalty of the military. The 
primary point of conflict between the two camps was the pursuit 
by AD of what the military leadership considered to be radical so- 
cial reforms. Many officers also resented AD's active recruiting 
efforts among the officer corps. When Betancourt floated the idea 



180 



National Security 



of establishing a party militia, the military moved directly to 
preempt this challenge to its authority. The nearly bloodless coup 
of November 24, 1948, ousted Gallegos and AD from power. 

A three-man provisional military junta, headed by Major Carlos 
Delgado Chalbaud, who had served as defense minister during the 
trienio, assumed power. Allegedly hesitant to repeat the mistakes 
of 1945 by hastily reestablishing a civilian government, the provi- 
sional government gave increasing signals of its intention to es- 
tablish a permanent military regime. In November 1950, a band 
of thugs dragged the more moderate Delgado from his home and 
murdered him. His successor, Caracas lawyer German Suarez 
Flamerich, served as a figurehead for Perez. 

The elections of November 1952 removed any facade of legitimacy 
from the Perez regime (see The Triumph of Democracy, ch. 1). 
After balloting marked by clumsy fraud on the part of the regime, 
Perez had himself declared president. No longer directing affairs 
from behind the scenes, Perez made no pretense of ruling democrat- 
ically. Having no political constituency, he ruled in the name of 
and on behalf of the military . Officers received tremendous salary 
increases; new and exotic arms were purchased; and the luxuri- 
ous Officers Club (Cfrculo de las Fuerzas Armadas) was built in 
Caracas at a cost equivalent to millions of United States dollars 
to raise the military's morale. 

Perez ruled in particularly brutal fashion. The regime strictly 
censored the press and set up an intricate spy network to seek out 
and punish those suspected of disloyalty. The National Security 
Police (Seguridad Nacional — SN) became increasingly powerful 
and threatening to the integrity of the armed forces as they arrested 
more and more military officers. In a further effort to consolidate 
his power, Perez, a native of Tachira, distributed key posts in the 
government and the military on the basis of personal loyalty rather 
than professional merit — a throwback to the old days of the tachirense 
(native of the state of Tachira) clique, but even more insidious in 
its debilitating effect on the military institution. Once again, junior 
officers grew to resent the incompetence, corruption, and brutality 
of their superiors. By showing favoritism to the army, Perez also 
alienated air force and naval officers. It was these factions within 
the officer corps that led to military rebellion against Perez in 1958. 
Although initially unsuccessful, the rebellion led by the air force 
triggered widespread popular unrest that brought other elements 
of the armed forces into the anti-Perez coalition. The dictator fled 
the country on January 23, 1958. 

The five-man provisional military- civilian junta that emerged 
under the leadership of Admiral Wolfgang Larrazabal guided the 



181 



Venezuela: A Country Study 

country directly toward what was now clearly the will of the peo- 
ple: a freely elected civilian government. Despite numerous revolts 
among the armed forces, the junta organized elections that culmi- 
nated in Romulo Betancourt's election to the presidency on De- 
cember 7, 1958. Betancourt's inauguration on February 13, 1959, 
was a line of demarcation in Venezuelan history between centu- 
ries of military dominance and the modern era of civilian democratic 
rule. 

Initially, the Betancourt government faced considerable active 
opposition from within the armed forces. Right-wing officers, dis- 
enchanted with liberal civilian rule, attempted coups on several 
different occasions, and twice in 1962 officers and enlisted men 
of the left-wing Infantena de Marina (Marine Infantry) launched 
unsuccessful rebellions. Such activities eventually subsided, 
however. The government of Raul Leoni (president, 1964-69) saw 
only one small uprising by army officers loyal to Perez. During 
periods of political crisis, rumors periodically circulated in Venezue- 
la that the military was preparing to take power. After the 1960s, 
however, these rumors appear to have been without foundation. 
By 1990 the democratic order appeared to be well established. 

Although the armed forces shunned a direct role in the nation's 
politics, they continued to act as a powerful pressure group, lobby- 
ing in their own corporate self-interest. Their primary concerns 
included the protection of their share of the national budget, the 
security of the country's borders, the maintenance of internal order, 
the operation of the police, and the development of an indigenous 
military industry. It was in these areas that the civilian government 
had to consult with and secure the approval of the armed forces 
leadership before proceeding with any major changes in policy. 

Strategic Setting 

Like all countries, Venezuela must approach questions of secu- 
rity and defense by considering its geography, its natural resources, 
its population, and its regional political interests. During the modern 
era, two such considerations have shaped Venezuelan security policy 
more than any others. These are the nation's status as a major 
producer and exporter of petroleum, and its role as a regional power 
within the Caribbean Basin (see Glossary) area. The country's 
external defense posture, its internal disposition of forces, and its 
relations with neighboring states responded in large part to these 
imperatives. 

The development of Venezuela as a major oil producer after 
World War II transformed the nation both economically and so- 
cially. This process of societal transition was reflected in the military 



182 




Amphibious vessels 
Courtesy Embassy of Venezuela, Washington 

institution as well. Long an unprofessional, internal security- 
oriented force subject to the vagaries of policy as laid down by self- 
absorbed dictators, the Venezuelan military began a transition 
under democratic rule. 

The growth of the oil industry provided both a legitimate mis- 
sion for the armed forces in protecting the oil fields and, even more 
important, the resources with which to accomplish that mission. 
President Betancourt established the policy of committing signifi- 
cant revenues to the military. Although Betancourt 's motivation 
was largely a political one — keeping the officer corps satisfied so 
as to forestall future military intervention in affairs of state — his 
actions yielded a benefit in purely military terms as well. Subse- 
quent administrations have maintained this policy. As a result, the 
National Armed Forces (Fuerzas Armadas Nacionales — FAN) had 
become by the 1970s the best equipped military force in Latin 
America. With this strengthened military posture and the nation's 
enhanced stature in both regional and international arenas, the con- 
cept of Venezuela as an actor with a defined sphere of influence 
began to take hold in Caracas. At the same time, other South 
American countries grew to resent, to varying degrees, falling un- 
der the shadow of their more resource-rich neighbor. 



183 



Venezuela: A Country Study 

Venezuela's regional sphere of influence equated roughly with 
the strategic area that came to be known during the 1980s as the 
Caribbean Basin. Culturally, the countries of the basin are diverse, 
ranging from primarily Hispanic Central America to the former 
British colonies of the Eastern Caribbean to the French and Afri- 
can fusion in Haiti. Despite some variations, all the countries of 
the basin were economically underdeveloped, and therefore poten- 
tially unstable politically. Beginning in the 1960s, the presence of 
communist Cuba, its major military buildup, and its undisguised 
intentions to subvert established governments in the area added 
an urgency to the goal of maintaining Caribbean stability. Cuba's 
alignment with the Soviet Union also forced strategists in democratic 
nations such as Venezuela to factor global variables into their secu- 
rity posture. 

During the 1980s, Venezuela involved itself actively in the Carib- 
bean Basin. Despite some rhetorical bows to the concept of nonin- 
tervention, policy makers generally supported the United States 
intervention in Grenada in 1983. After the reestablishment of 
democratic government in that country, Venezuela provided limited 
economic aid to Grenada, as it had to other island states. 

In 1980 Venezuela and Mexico had signed the San Jose Accord 
to provide oil at subsidized rates and other economic assistance 
to designated beneficiary states in the Caribbean Basin (see For- 
eign Assistance, ch. 3). Their purpose was to cushion the impact 
of oil price increases on the small oil-importing countries of the 
basin. Their motivations, however, were as much political and stra- 
tegic as altruistic. Given the already precarious economic condi- 
tion of most of these countries, the added burden of oil price 
increases in 1973 and 1979 had threatened to push many of them 
from stagnant poverty into widespread social unrest. Although the 
accord became less economically sustainable for Venezuela and 
Mexico as oil prices dropped throughout the 1980s, both countries 
continued to uphold its provisions and expand the number of 
beneficiaries throughout the decade, mainly because of the per- 
ceived political benefits and the potential adverse impact on the 
importing countries of an oil cutoff. 

Although the Venezuelan military was capable of projecting its 
power to a limited extent within the Caribbean Basin, it has never 
actively used this power. Instead, Venezuela has applied its efforts 
to promote regional stability mainly in the diplomatic arena (see 
Foreign Relations, ch. 4). This approach was epitomized by the 
Central American crisis of the 1980s. Venezuela was one of the 
original "core-four" nations — along with Mexico, Colombia, and 
Panama — that joined together in 1983 as the Contadora Group 



184 



National Security 



(see Glossary) in an effort to resolve the tensions in the region 
through negotiation and avoid armed conflict and possible foreign 
military intervention. 

Venezuela supported the Contadora process as a peaceful path 
to stability in an area where tensions had escalated following the 
1979 seizure of power by the Sandinista National Liberation Front 
(Frente Sandinista de Liberation Nacional — FSLN) in Nicaragua. 
The Venezuelan government, led by President Carlos Andres Pe- 
rez, had supported the Sandinistas during the struggle against 
Nicaraguan dictator Anastasio Somoza Debayle and had cooper- 
ated with Cuba, Costa Rica, and other governments to supply arms 
to the Nicaraguan rebels. The Perez administration, which had 
some doubts as to the FSLN's commitment to democratic princi- 
ples, apparendy believed that it could exert sufficient influence over 
a postrevolutionary Nicaraguan government to ensure some degree 
of pluralism. As the Sandinistas moved to force moderates out of 
the government, however, it became clear to Venezuela that the 
overwhelming foreign influence in Nicaragua was Cuban. Although 
Perez had cooperated with Cuban leader Fidel Castro Ruz in arm- 
ing the Nicaraguans, Venezuela still viewed Cuba as a regional 
competitor for political influence and as a potential military threat. 
Therefore, as the FSLN consolidated its rule, set up Cuban-style 
mechanisms of control, acquired significant amounts of Soviet 
weaponry to equip a growing military, and increasingly aligned 
itself with the Soviet Union and its communist allies in political 
and security matters, Venezuelans looked on with growing alarm. 

The Contadora process, however, proved incapable of dealing 
with the complex Central American situation. Among the core- 
four nations, Venezuela found itself advocating a much more 
moderate, security-conscious position than that espoused by the 
other sponsoring countries. Early on in the process, the govern- 
ment of Colombian president Belisario Betancur Cuartas appeared 
to take the lead in the negotiating process. But as the talks became 
protracted, the Mexican government of Miguel de la Madrid Hur- 
tado moved toward the forefront. The Mexicans, however, gener- 
ally advocated conditions more favorable to the Nicaraguan 
government than to Costa Rica, Honduras, El Salvador, and 
Guatemala. From the Venezuelan perspective, the talks became 
increasingly counterproductive as they dragged on for years without 
producing an agreement. During the early to mid-1980s, Venezue- 
lans became preoccupied to an increasing extent with their own 
economic crisis and apparendy could not muster sufficient resources 
or influence to devote to what seemed to many a futile diplomatic 
exercise. As the United States government refocused its efforts after 



185 



Venezuela: A Country Study 

1990, working through public and private dilomacy to influence 
the process toward a resolution that would limit the interventionist 
nature of the Sandinista regime and promote pluralism in Nicara- 
gua, Caracas came to concur informally with these goals and dis- 
engaged itself somewhat from the negotiations. 

Venezuela and the United States 

The strategic relationship between Venezuela and the United 
States has changed as rapidly as has Venezuela itself during the 
latter half of the twentieth century. Before World War II, Venezuela 
was a relatively traditional Latin American society, ruled by a suc- 
cession of dictators and dependent on the cycles of an agricultur- 
ally based economy. As its growing oil wealth changed and 
modernized Venezuelan society, however, Venezuela became a 
more important strategic consideration for the United States. As 
Venezuela began to develop its own limited sphere of influence, 
the United States began to consider it as a potential strategic part- 
ner in the Caribbean area. 

The basic strategic assumptions of the two countries, although 
not identical, tracked closely enough to make possible a suppor- 
tive and cooperative relationship during the 1960s. As an emerg- 
ing democracy, Venezuela opposed authoritarian governments of 
both the right and the left. In the early 1960s, Venezuela came 
to share the United States conviction that the Castro regime in Cuba 
presented the most compelling threat to the stability of Latin Ameri- 
ca and the Caribbean. Cuban backing of Venezuelan insurgents 
confirmed this belief. Counterinsurgency training provided by the 
United States contributed to the successful quelling of the insur- 
gency by the late 1960s. 

During the 1970s, Venezuela and the United States followed 
more divergent paths with regard to security matters. The global 
strategy of containing communism had drawn the United States 
into a debacle in Vietnam. As the prestige and perceived influence 
of the United States waned, lesser powers such as Venezuela moved 
to pursue policies of independent outreach to the Third World. 
Although largely political in nature, Venezuela's relations among 
Third World nations had distinct security connotations as well, seek- 
ing as they did to promote development within a democratic frame- 
work that would yield a broader market for oil exports. 

By the 1980s, Venezuela had articulated such a significant range 
of differences with the United States regarding security matters — on 
such issues as intervention in the affairs of other states and the rela- 
tive influence of external versus internal factors on regional stability — 
that the kind of close identification of interests that characterized 



186 



National Security 



the relationship in the 1960s was no longer workable. Neverthe- 
less, the two countries continued to share certain basic strategic 
interests that bound them in a shifting and sometimes uneasy part- 
nership. These shared interests included the safety and free passage 
of shipping through Caribbean sea-lanes, concern for the Carib- 
bean region as a market for exports, a desire to promote political 
stability by encouraging and supporting democratic governments, 
and opposing the expansion of Cuban presence and influence. 

Some of these shared interests came to the fore in the debate 
that preceded the United States sale of F-16 jet fighters to the 
Venezuelan air force in 1983. Despite some concern expressed by 
such other regional powers as Colombia, the administration of 
United States president Ronald Reagan pushed for the sale on the 
grounds that Venezuela needed advanced aircraft to help protect 
the Caribbean sea-lanes, to secure its oil resources against exter- 
nal attack, and to help secure the approaches to the Panama Canal. 
The Reagan administration argued that regional allies such as 
Venezuela should be encouraged to share strategic responsibilities 
and to complement United States military forces. Military advances 
in Cuba and Nicaragua, along with the potential at that time for 
the Soviet Union's military use of an expanded airport base on 
Grenada, further buttressed these arguments. 

Despite such public characterizations of Venezuela as an active 
contributor to regional defense, both countries accepted the propo- 
sition that Venezuela fell under the strategic umbrella of the Unit- 
ed States. As crucial as Venezuela's oil resources were to the nation's 
economic well-being, they were also of significant strategic interest 
to the United States, the primary consumer. The United States 
therefore fulfilled the role of unacknowledged guarantor of Venezue- 
lan sovereignty if for no other reason than to maintain access to 
this important source of petroleum in the Western Hemisphere. 

The threat of communist expansion that had undergirded secu- 
rity policy even before the advent of the Castro regime in Cuba 
appeared to have waned considerably by the 1990s. Nevertheless, 
it appeared likely that Venezuela and the United States would con- 
tinue to cooperate in maintaining stability in the Caribbean Ba- 
sin. Venezuela's economic setbacks, however, seemed to indicate 
that it would not soon return to the regional prominence it enjoyed 
in the 1970s. 

Venezuela and Colombia 

These two neighbors shared many points in common. Both were 
large South American states with security concerns that encom- 
passed the Caribbean area as well. Both have functioned under 



187 



Venezuela: A Country Study 

representative democratic systems for decades. Associated under the 
Spanish colonial Viceroy alty of New Granada, both nations could 
point to Bolivar as their liberator (see Spanish Colonial Life, ch. 
1). The disparities between Venezuela and Colombia, however, have 
contributed to a fluctuating undercurrent of tension over the years. 

The most visible irritant in the relationship was the dispute over 
the boundary demarcation in the Golfo de Venezuela (Golfo de 
Guajira as the Colombians refer to it — see fig. 9). The roots of the 
maritime boundary issue stretch back to colonial times. The bor- 
ders of the nations that emerged from the wars for independence 
were not clearly defined. As these nations grew, disputes became 
unavoidable. In 1881 Venezuela and Colombia appealed to King 
Alfonso XII of Spain to arbitrate their conflicting claims. Venezuela 
rejected the eventual 1891 arbitration decision because of a dis- 
agreement over the location of the source of the Rio Oro. Fifty 
years later, the two nations signed a treaty that defined the border 
along the Peninsula de la Guajira. This 1941 treaty, however, has 
been criticized by many Venezuelans for granting too much terri- 
tory to Colombia. This attitude has hardened the stance of the 
armed forces with regard to the Golfo de Venezuela; it has also 
rendered more tentative the attempts of subsequent governments 
to negotiate the boundary in the gulf. Moreover, the development 
of oil resources in the area and the expectation of further expan- 
sion also raised the stakes involved in a potential resolution. 

After an abortive effort in the early 1970s and an adamant refusal 
by Venezuela to submit the dispute to international arbitration, 
the two governments announced in 1981 a draft treaty designated 
the Hypothesis of Caraballeda. When President Luis Herrera Cam- 
pins' s foreign minister presented the draft to representatives of the 
officer corps, however, he received an extremely negative reaction. 
Opposition to the treaty quickly spread, forcing the government 
to withdraw from further negotiations with the Colombians. There 
have been no formal talks dedicated to the maritime boundary since 
that time. 

In the mid- to late 1980s, Caracas and Bogota rose above their 
diplomatic failure on the boundary issue to effect greater coopera- 
tion on security issues. In January 1988, the interior ministers of 
both countries met in the Venezuelan border town of San Anto- 
nio de Tachira. The meeting produced an agreement to increase 
the military presence on both sides of the border and to expand 
cooperation in such areas as counternarcotics and counterinsur- 
gency. The movement toward cooperation grew out of a shared 
realization that Colombia's internal security problems — namely 
drug trafficking and insurgency — were spilling over the border. 



188 



National Security 



On several occasions in the late 1980s, Colombian guerrillas 
attacked posts manned by the Venezuelan Armed Forces of Cooper- 
ation (Fuerzas Armadas de Cooperation — FAC) — also known as 
the National Guard. Drug trafficking activity, always attended by 
increased levels of violence, also picked up. 

Venezuelans generally have tended to view Colombia as a vio- 
lent and unstable country whose problems and people washed over 
the border into more peaceful and prosperous Venezuela. News 
of attacks on border posts, kidnappings of wealthy Venezuelan 
ranchers by Colombian guerrillas, and drug seizures during trans- 
shipment have reinforced this conception. Another issue, Colom- 
bian indocumentados (undocumented or illegal aliens), underscored 
for Venezuelans the disparities in both internal security and eco- 
nomic development between themselves and their neighbors. Es- 
timates of the number of illegal Colombians in Venezuela varied, 
but most ran in the hundreds of thousands (see Migration, ch. 2). 
Although some Venezuelans saw Colombians as a threat to law 
and order, their major impact was economic. During the boom 
years of the Venezuelan oil economy, the Colombian immigration 
issue constituted a minor irritant. As the economy constricted during 
the 1980s, however, Venezuelans grew more resentful of the Colom- 
bian presence. Nevertheless, it was highly unlikely that this problem, 
even in combination with the Golfo de Venezuela dispute, would 
provoke active hostilities between the two countries. 

Venezuela and Guyana 

Over the years, Venezuela's claim to the Essequibo region of 
Guyana has been a much more bitter issue than the maritime dis- 
pute with Colombia. Historical and cultural dissimilarities between 
Venezuela and Guyana explained this fact to some extent. Former- 
ly British Guiana, Guyana represented for Venezuela the unfair 
intrusion of an extrahemispheric colonial power into the Carib- 
bean region. Originally settled by the Dutch, the Essequibo region 
was claimed by the Spanish, seized by the British, and subsequendy 
restored to the Netherlands by France. Britain finally took firm 
possession in 1803 during the Napoleonic Wars. After achieving 
independence from Spain, the Republic of Gran Colombia, and 
later Venezuela, petitioned Britain for a resolution of the border 
question. The Venezuelans held that the Essequibo River should 
mark their eastern boundary; the British favored a line from the 
mouth of the Rio Orinoco to Mount Roraima on the Brazilian 
border as the demarcation line. Negotiations failed to achieve a 



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Venezuela: A Country Study 



compromise. A protracted period of proposals, threats, and brief 
skirmishes yielded in 1897 to international arbitration, a step strong- 
ly urged on the British by the United States. 

The final decision of the arbitral tribunal awarded Punta Bari- 
ma and the mouth of the Rio Orinoco to Venezuela, but granted 
the vast majority of the Essequibo territory to Britain. The Venezue- 
lan representatives, claiming that Britain had unduly influenced 
the decision of the Russian member of the tribunal, protested the 
outcome. As a poor country with comparatively limited military 
capabilities, Venezuela could not press its claim against the Brit- 
ish empire by force of arms. Periodic protests, therefore, were con- 
fined to the domestic political arena and international diplomatic 
forums. 

In 1962 Caracas began to make more forceful efforts to resolve 
the Essequibo dispute. Britain agreed in November to hold tripar- 
tite negotiations, including representatives of British Guiana, which 
would review the record of the 1899 arbitration. After numerous 
ministerial conferences, the parties agreed to procedures by which 
the conflicting claims could be resolved definitively. Subsequent 
negotiations were complicated by Venezuela's occupation in 1966 
of a portion of Ankoko Island in the Cuyuni River that had previ- 
ously been claimed by Guyana (which became independent that 
same year). In 1968 Venezuela extended its maritime claim to 
include a portion of the Atlantic Ocean beyond Guyana's three- 
nautical-mile claim. The Guyana government also accused Cara- 
cas of aiding an insurrection in southern Guyana the following year. 
This incident prompted reports of a Venezuelan military buildup 
near the Guyanese border. Against this backdrop of conflict and 
recriminations, the tripartite commission that had been negotiat- 
ing the territorial dispute declared itself incapable of producing a 
settlement. The two governments began bilateral talks in 1970. 

In 1970 leaders of both countries signed the Protocol of Port-of- 
Spain after talks hosted by the government of Trinidad and Toba- 
go. Under the terms of the protocol, Caracas agreed to suspend 
its territorial claims for twelve years. The two nations established 
diplomatic relations and continued their talks. In 1981, however, 
Venezuelan president Herrera reasserted the historical claim to the 
Essequibo and refused to renew the protocol. Venezuelan politi- 
cal and military leaders began to make bellicose statements with 
regard to the Essequibo; there was much speculation in the press 
that Venezuela might take the region by force. This saber rattling 
aroused the concern of the Brazilians, who also considered Guyana 
within their sphere of influence. In September 1982, Guyanese 



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president Forbes Burnham visited Brasilia and agreed to a project 
whereby the Brazilian government would build a road northward 
through the Essequibo region. If the Venezuelans had entertained 
notions of reclaiming the territory by force, this demonstration of 
concern by their giant neighbor to the south apparendy deterred 
them from taking action. Accordingly, both governments submit- 
ted the dispute to the United Nations secretary general under the 
terms of the 1966 tripartite agreement signed in Geneva. The is- 
sue lay dormant through 1990. 

Although the Venezuelan claim to the Essequibo stemmed in 
large part from nationalistic and anticolonialist sentiments, it also 
involved the control and exploitation of natural resources. Long 
unexplored, the Essequibo reportedly contains important mineral 
and petroleum deposits. Its crude oil reserves, according to some 
sources, are of a lighter grade than most of those produced in 
Venezuela. Lighter oils are more easily extracted and refined, and 
they command a higher price on the world market. It was highly 
unlikely, however, that Venezuela would annex the Essequibo by 
force, risking regional conflict and international condemnation, 
merely to add to its already considerable petroleum and mineral 
reserves. 

Venezuela and Brazil 

Historically, the strategic postures of Venezuela and Brazil have 
proven to be largely exclusive, with few points of intersection or 
friction. In contrast to Venezuela's inclination toward the Carib- 
bean, Brazil's external focus lay to the east, toward the southern 
Atlantic Ocean. As Brazil has begun to emphasize the extension, 
exploitation, and protection of its Amazon resources, however, 
minor potential conflict areas have emerged. 

The Brazilian interest in the Essequibo dispute served as a sig- 
nal of peripheral friction. Some Venezuelan observers have claimed 
that Brazil harbored a desire to extend not only its influence but 
also its territorial access northward to the Caribbean. It is not clear 
whether governments in Caracas have shared this concern. Brazilian 
outreach to previously neglected areas such as Guyana and Suri- 
name, however, has highlighted for Venezuelan strategic planners 
the vulnerability of the southern and eastern frontiers. In this con- 
text, the movement to develop and populate areas more remote 
from the Caribbean heartland, such as Ciudad Guayana, could 
be viewed not only as a response to economic circumstances, but 
also as a move to bolster the nation's security posture. 

Although neither government has stressed the issue publicly, the 
question of itinerant Brazilian gold miners plying their trade illegally 



191 



Venezuela: A Country Study 

across the border has been an irritant to Venezuela. Although the 
strategic effect of this phenomenon was negligible, its implications 
appeared serious to some Venezuelan policy makers. The situa- 
tion touched on two nationalistic sore points: Venezuela's inability 
to police effectively its long southern border and its apparent inabi- 
lity to protect its natural resources. The latter issue was a particu- 
larly resonant one in light of Venezuela's dependence on one 
resource — petroleum — for its economic existence. 

Role of the Military in National Life 

Missions 

Broadly speaking, the FAN by the 1990s had two major mis- 
sions: external defense and internal security. The counterinsur- 
gency mission of the 1960s and 1970s had ended with the successful 
resolution of the conflict with leftist guerrillas. After that time, the 
military's approach to its missions became less focused, and the 
armed forces became a more technocratic and bureaucratic insti- 
tution that was more susceptible to the pressures of politics. 
Although Venezuela's oil resources lent a certain impetus to the 
external defense mission of the FAN, the absence of a viable ex- 
ternal threat dulled the response of policy makers and shifted the 
motivation of defense planners away from contingency planning 
and more toward political considerations, such as maintaining mili- 
tary pay and benefits. This phenomenon appeared likely to per- 
sist and to intensify as the potential conventional threat from Cuba, 
which had seemed viable during the early 1980s, continued to wane 
during the 1990s. 

Venezuelan military doctrine, in keeping with the perceived role 
of the armed forces in a democratic state, theoretically emphasized 
readiness for external defense. Strategic planners attempted to pre- 
pare their forces to engage in a conflict of limited objectives. Tac- 
tically, the doctrine called for the employment of combined forces 
capable of employing significant firepower and shock capability, 
while also displaying adequate mobility. It stressed an active defense 
in which regular forces would engage the enemy and reserves would 
man static defensive positions. The FAN's amphibious and air 
transport capabilities, though limited, extended its strategic reach 
somewhat; naval forces also lent a degree of support to a ground 
effort in the areas of sealift and antisubmarine warfare. Although 
the FAN's ability to implement its doctrine was hampered by equip- 
ment shortages, maintenance problems, and other logistical short- 
comings, these problems generally were less severe than those 
exhibited by most other Latin American military institutions. 



192 



Venezuelan marine infantry 
Courtesy Embassy of Venezuela, Washington 

Although the probability of external conflict was low, the role 
of the FAN in national life was still significant. Even under the 
democratic system reestablished in 1958, the FAN (including the 
National Guard) retained certain traditional responsibilities. Among 
these were the regulation and control of national highways; the secu- 
rity of basic industries such as petroleum and petrochemicals, energy 
production, and steel production; the administration of the prison 
system; the enforcement of federal taxes on alcoholic beverages; 
and the regulation of customs and immigration. In response to the 
FAN's traditional concern with the national borders, an active- 
duty officer usually headed the Directorate of Frontiers of the Minis- 
try of Foreign Affairs. According to law, Venezuelan frontier 
regions were considered security zones; accordingly, foreigners 
could not own land in these areas, and no construction or indus- 
trial development could take place there without the approval of 
the government as expressed by the Ministry of National Defense. 
Other security zones included coastal areas, territory surrounding 
lakes and rivers, and areas adjacent to military installations and 
to industrial facilities engaged in basic industrial production. In 
a more limited sphere, the FAN also conducted small-scale civic- 
action projects. Most of these projects were confined to the dis- 
pensing of medical care — immunization and dental and medical 



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Venezuela: A Country Study 

attention — to residents of isolated rural areas. The army has also 
provided literacy programs for these citizens. 

In theory, the internal security mission of the FAN involved the 
National Guard more than the other branches of service. This fact 
stemmed from the purely domestic orientation of the National 
Guard. In practice, however, the delineation of mission blurred 
somewhat. National Guard posts in frontier regions have responded 
to cross-border attacks and incursions by Colombian insurgent 
forces, thereby fulfilling an external defense mission. Some observ- 
ers also have characterized National Guard efforts against drug 
trafficking as an external defense effort. By the same token, 
Venezuelan governments have accepted the fact that regular mili- 
tary forces at times may have to be employed in order to maintain 
order in major cities. When riots or violent demonstrations have 
broken out, the public routinely has demanded a response from 
the minister of national defense in addition to the efforts expend- 
ed by local police. 

Manpower 

The FAN consisted of a well-paid professional officer corps, a 
well-paid nucleus of career noncommissioned officer (NCOs), and 
two-year conscripts who comprised the bulk of the noncommissioned 
officers and all of the privates and seamen. The National Guard 
was an exception to this pattern; it was made up completely of 
volunteers, many of whom had already completed their conscrip- 
tive service in one of the other services. 

According to the Laws and Regulations of the FAN, all Venezue- 
lans between the ages of eighteen and fifty shared an equal obliga- 
tion to military service. All citizens, including women, were required 
to register for conscription. In practice, however, conscription drew 
disproportionately from young men in rural areas and from among 
the poor. This situation was partially a result of the numerous 
categories of deferments allowed potential draftees. Recruits could 
be deferred for illness or disability, marriage, a sibling already in 
service, status as sole support of one's family, pursuit of higher 
education, and membership in certain religious denominations ad- 
vocating pacifism. Other explanations for the nonrepresentative 
nature of draftees included the relatively low manpower needs of 
the FAN and the comparative benefit of a military salary for youths 
of the lower class. 

The role of women changed slightly in the Venezuelan military 
after the passage of a revised conscription law in 1978. Although 
the law required women to register for the draft — an unpreceden- 
ted development — it stated that military service for women was 



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National Security 



mandatory only in time of war. As Venezuela has never engaged 
in a war with any of its neighbors, it appeared unlikely that wom- 
en would ever be called to service in any significant numbers. As 
for those women who elected voluntary military service, the minister 
of national defense determined which units could accept these 
recruits. The categories of service open to women included sup- 
port positions, health, civil defense, police, transport, and refugee 
services. 

The pay and perquisites of Venezuelan military personnel were 
generous by Latin American standards. Traditionally, pay scales 
have been maintained at a rough parity with those of the United 
States armed forces. In addition, officers and career noncommis- 
sioned officers and their immediate families enjoyed access to a mili- 
tary social security system administered independendy by the FAN. 
The system provided medical care to military personnel at little 
or no cost. Pension benefits were also generous. The categories 
of pensioners included those with certified disabilities, those who 
reached the limit of their time-in-grade without promotion, retirees, 
and surviving family members of deceased military personnel. 
Members of the FAN became eligible for retirement after ten years 
of service. Retirement became mandatory after thirty years, at 
which point one could retire at full salary. The president had the 
authority to extend the careers of certain officers beyond the thirty- 
year limit with the approval of the Superior Board of the FAN. 
No one, however, was allowed to serve more than thirty-five years 
in the military. 

Defense Spending 

Although there is some evidence that military spending tight- 
ened in response to the fiscal crisis of the 1980s, the process of draft- 
ing and approving the defense budget has remained largely closed 
to public scrutiny. The FAN submitted its budget requests direct- 
ly to the president through its own comptroller general. Much of 
the budget was approved or amended by the executive with only 
limited consultation with the Congress. The heads of the various 
branches of service reportedly exercised broad control over their 
budget requests. They were restricted as to the overall level of those 
requests, however, by several factors. One was the traditionally 
high percentage of the military budget devoted to salaries and 
benefits; in times of fiscal austerity, military equipment and read- 
iness suffered disproportionate cutbacks. Another budgetary limi- 
tation was the high cost of the entitlements and other benefits 
accorded civilians; these outlays and the maintenance of a large 
government bureaucracy also tended to limit the funding available 



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Venezuela: A Country Study 

to the military. As a result, the military portion of the overall 
government budget rarely exceeded 10 percent. 

From 1950 to 1986, Venezuelan military spending as a percent- 
age of gross domestic product (GDP — see Glossary) averaged be- 
tween 1.5 percent and 2 percent. Increases in this figure in the late 
1980s appeared to be attributable to the government's efforts to 
maintain a stable military budget amid a contracting overall econ- 
omy. This effort continued a pattern of several decades' standing, 
whereby during austerity periods the military portion of the bud- 
get was cut by a lower percentage than was the remainder of the 
budget. By the same token, during periods of expanding revenue, 
military expenditures generally rose by a lower percentage than 
did other outlays. This pattern indicated a desire on the part of 
both AD and Social Christian Party (Comite de Organization Polft- 
ica Electoral Independiente — COPEI) administrations to insulate 
the military, at least to some extent, from budget cuts. The com- 
parative restrictions on military expansion during boom times might 
also have indicated a preference by the civilian executive for limit- 
ing the role of the military in the overall government. Even in an 
established democracy such as Venezuela's, presidents felt com- 
pelled to continue a political balancing act with regard to the 
military. 

Venezuela's lack of a significant domestic arms industry and its 
consequent importation of almost all of its weaponry represented 
another constraint on defense spending. The FAN attempted to 
address this deficiency in 1975 by establishing the Venezuelan Mili- 
tary Industries Company (Compafua Anonima Venezolana de In- 
dustrias Militares — CAVIM). Despite initial expectations of 
channeling government revenues into the development of a sig- 
nificant domestic arms industry, by the 1990s CAVIM had made 
little progress. Domestic arms production consisted of small arms 
ammunition, explosives, some spare parts, and coastal patrol craft 
for the navy. CAVIM 's development fell victim to the oil revenue 
crisis of the 1980s and the purchase of big-ticket advanced weaponry 
such as the F-16 fighter. Further expansion of the domestic arms 
industry appeared unlikely during the 1990s. 

Armed Forces Organization, Training, and Equipment 

According to Article 190 of the constitution of 1961, the presi- 
dent serves as commander in chief of the National Armed Forces 
(Fuerzas Armadas Nacionales — FAN). The day-to-day adminis- 
tration of the FAN, however, falls to the minister of national 
defense, traditionally a senior general officer. Other officials with 



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National Security 



responsibilities for the entire FAN were the FAN's inspector general 
and comptroller general. 

The National Security and Defense Council, established in the 
1970s, functioned as a planning and advisory body for the presi- 
dent on military and security matters. Its membership included 
the minister of national defense, the minister of interior, the minister 
of foreign affairs, the minister of finance, the inspector general of 
the FAN, the chief of the joint general staff of the FAN, and other 
ministers designated by the president. The council recommended 
policy to the president, prepared measures for its implementation, 
drafted mobilization and demobilization orders, and coordinated 
the defense efforts of national, state, and local authorities. The presi- 
dent appointed a permanent secretary of the council, who ad- 
ministered a political committee, an economic committee, a social 
committee, a military committee, a mobilization committee, and 
other committees that might be created by the president. The Na- 
tional Intelligence Service was a functional department of the 
council. 

The military chain of command extended downward from the 
president to the minister of national defense to the commanders 
of the individual services (see fig. 10). The Superior Board of the 
FAN was a purely military organization that advised the president, 
the National Security and Defense Council, and the Ministry of 
National Defense on security and defense matters. The board con- 
sisted of the minister of national defense, the inspector general, 
the chief of the Joint General Staff, and the service commanders. 
The chief of the Joint General Staff acted as the secretary of the 
board. The approval of the board was required for major weapons 
acquisitions. 

The Joint General Staff of the FAN did not exercise operational 
control over the services. It functioned as an advisory body and 
as the planning organ of the National Defense Ministry under the 
direction of the minister of national defense and the Superior Board. 
The Joint General Staff prepared strategic planning, logistics, in- 
telligence, training, and educational policies and plans for the en- 
tire FAN. It did not have budget authority, however; each branch 
of service handled its own budget planning. 

The assets of the FAN were assigned and deployed in five geo- 
graphically defined military regions, which functioned as unified 
commands. Most of the forces were deployed in Military Region 
One, headquartered in Caracas. Military regions two, three, four, 
and five were headquartered in San Cristobal, Maracaibo, San Fer- 
nando, and Ciudad Bolivar, respectively. All air and naval assets 
were located in either region one or region two (San Cristobal). 



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Venezuela: A Country Study 



PRESIDENT 



NATIONAL SECURITY 
AND 

DEFENSE COUNCIL 



INSPECTOR 
GENERAL 
OF THE FAN 1 



MINISTER OF 
NATIONAL DEFENSE 



CHIEF OF 
THE JOINT GENERAL 
STAFF OF THE FAN 



ARMY 
COMMANDER 



NAVY 
COMMANDER 



AIR FORCE 
COMMANDER 



FAC 2 
COMMANDER 











MILITARY ZONES (5) 










1 FAN • 
2 


— Fuerzas Armadas Nacionaies (National Armed Forces) 


FAC ■ 


— Fuerzas Armadas de 


Cooperacion (Armed Forces of Cooperation, or National Guard) 



Figure 10. Structure of the Armed Forces, 1990 
The Army 

Traditionally the predominant branch of service, the army dur- 
ing the 1970s and 1980s lost a certain amount of prestige vis-a-vis 
the air force and the navy, the two services that benefited most 
from the purchase of upgraded weaponry during that period in the 
FAN. Nevertheless, the army remained in 1990 the largest of the 
services, and its general officers still dominated top leadership posts 
in the FAN. 

In 1990 the army consisted of approximately 34,000 personnel 
of all ranks under the direction of the commander of the army. 
The bulk of these troops were organized into five divisions. Four 
of these were infantry divisions, each of which encompassed four to 
six battalions. The remaining division — the First Cavalry Division, 
headquartered at San Juan de los Morros, some fifty kilometers 



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National Security 



South of Maracay, or about eighty kilometers south-southwest of 
Caracas — included most of the army's armored units. An indepen- 
dent airborne regiment and ranger brigade also maintained their 
headquarters in Military Region One (Caracas). Other deployments 
in and near the capital included the Fourth Infantry Division, head- 
quartered at Maracay, an armored brigade stationed at Valencia, 
and an infantry brigade and the First Antiaircraft Artillery Group, 
both headquartered in Caracas. Additional independent units in- 
cluded the Presidential Guard Regiment, an aviation regiment, 
an engineer regiment, and a military police regiment. As of the 
late 1980s, the army's long-range plans called for the establishment 
of one additional infantry division. The placement of forces reflected 
the traditional political importance of the capital, as well as 
Venezuela's strategic orientation toward the coastal area and the 
Caribbean. 

The army's mechanized and artillery assets were somewhat dated 
in comparison with the newer, higher-technology equipment em- 
ployed by the air force and the navy (see table 13, Appendix). For 
example, the only main battle tank in the inventory was the French- 
made AMX-30, of immediate post-World War II vintage. The 
standard-issue infantry weapon was the Belgian-made FN FAL 
7.62mm assault rifle. Elite and specialized units carried Israeli Uzi, 
Italian Beretta, German Walther, and American Ingram sub- 
machine guns. The army's single antiaircraft artillery group re- 
lied on rather ineffective 40mm guns rather than surface-to-air 
missiles, indicating a heavy reliance on the air-to-air interception 
capabilities of the air force. This posture responded to the lack of 
a significant regional air-strike threat aside from that posed by 
Cuba, which was distant enough to allow for adequate warning 
and response time. 

Army officers received their initial training at the Military Acade- 
my at El Valle outside Caracas. Officers could pursue postgradu- 
ate training at civilian universities (although only a small percentage 
did so) or at the Polytechnic University of the Armed Forces. The 
Staff College prepared officers for advanced command responsi- 
bilities. Some officers also studied abroad, particularly at the United 
States Army's School of the Americas at Fort Benning, Georgia. 
The army also administered an NCO school and other specialized 
schools for enlisted personnel at Maracay. 

The Navy 

In 1990 the navy maintained a force level of approximately 
10,000, a figure that included a marine infantry corps of some 5,000 



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Venezuela: A Country Study 

personnel. The branch was headed by the commander of naval 
operations, who exercised administrative and operational control 
over a number of subordinate commands, among them the main 
naval squadron at Puerto Cabello, the marine infantry corps, the 
naval aviation command at La Garlota Airport near Caracas, a 
River Forces (Fuerzas Fluviales) Command at Ciudad Bolivar on 
the Rio Orinoco, and the Coast Guard at Puerto Cabello. 

After years of subordination to the army, during which it strug- 
gled with antiquated equipment, the navy began to benefit from 
civilian democratic rule in 1960, when it purchased a submarine 
from the United States Navy. Concerted upgrading of naval 
materiel did not really begin, however, until 1972, when Venezuela 
purchased an American "Guppy II "-type submarine; another was 
purchased in 1973, along with two decommissioned American des- 
troyers. From 1974 to 1975, the navy purchased six " Constitution "- 
class patrol fast attack craft from Britain. It also acquired two 
German-built Type 209 submarines from 1976 to 1977. Six Italian 
"Lupo" missile frigates ordered in 1975 were delivered and in ser- 
vice by the early 1980s (see table 14, Appendix). 

Venezuelan naval aviation was not established as a distinct ele- 
ment until the late 1970s. With the exception of helicopters, all 
of its assets were stationed at La Carlota Airport near Caracas. 
Marine infantry personnel were deployed in four battalion-sized 
units, referred to as * 'tactical combat units," headquartered at Mai- 
quetia, Puerto Cabello, Carupano in Sucrey, and Punto Fijo. The 
River Forces Command was also subordinate to the Marine In- 
fantry Command. The Coast Guard, established in 1982, main- 
tained its headquarters at Puerto Cabello. 

The Venezuelan Naval Academy (Escuela Naval de Venezuela) 
at La Guaira offered a five-year course of study culminating in a 
commission. Other naval schools at La Guaira included the Naval 
Postgraduate School and the Naval Superior War College. The 
Naval Training Center for enlisted personnel was located at Puer- 
to Cabello. In addition, there were a Naval Infantry Training 
Center, a Naval Armament Training Center, and a Naval Police 
School. 

The Air Force 

The air force benefited greatly from purchases of upgraded hard- 
ware in the 1970s and 1980s. The most highly publicized defense 
acquisition of the 1980s was the purchase of twenty- four F-16 fight- 
ers from the United States. At the time of their delivery in 1984-85, 
the F-16s represented the most advanced military aircraft in the 



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inventory of any South American air force. In 1990 other com- 
paratively advanced aircraft in service in Venezuela included the 
French Mirage 50 and older-model Mirage Ills and Mirage Vs, 
retrofitted to meet the more advanced performance standards of 
the Mirage 50s (see table 15, Appendix). In June 1990, the air force 
also let a contract with Singapore Aerospace Industries to upgrade 
its older, American-made CF-5A and CF-5B fighter aircraft. 

In 1990 the ranks of the air force included some 5,000 person- 
nel, very few of whom were conscripts. The service, headed by 
the commander of the air force, was organized into three com- 
mands: the Air Combat Command, the Air Logistics Command, 
and the Air Training Command. Combat aircraft were organized 
into three attack groups: one bomber group and two special oper- 
ations groups. The bomber group included one squadron equipped 
with Mirage fighter-bombers and based in Palo Negro; two squad- 
rons, based in Barquisimeto and Barcelona, equipped with CF-5s; 
and two F-16 squadrons, also based in Palo Negro. Two squad- 
rons of heavier bombers, British-made Canberras, were based in 
Barquisimeto and Barcelona. 

The Air Logistics Command controlled three transport groups, 
including the Presidential Squadron based in Caracas. The logis- 
tics command also owned reconnaissance aircraft and transport 
helicopters. The primary transport aircraft were the American-made 
C-130H and C-123. 

The Air Training Command included Air Training Group Num- 
ber 14, which was attached to the Military Aviation School at Mara- 
cay. The primary training craft were the T-34, the T-2D, and 
the EMB-312 Tucano. The six F-16B two-seat trainers were at- 
tached to the fighter squadrons. The air force required its officer 
candidates to complete a four-year course of study at Maracay be- 
fore receiving their commissions. The air force also had a number 
of specialist schools as well as its own Command and Staff School 
for advanced military studies. 

The Armed Forces of Cooperation (National Guard) 

The Armed Forces of Cooperation (Fuerzas Armadas de 
Cooperation — FAC) — also known as the National Guard — was a 
domestic paramilitary force that was incorporated into the FAN 
in 1954. In 1990 the FAC numbered approximately 20,000. Its 
operational commands included the Logistics Command, the Air 
Operations Command, and the Operations Command. The tacti- 
cal chain of command ran from commander of the FAC down- 
ward through three regional commands headquartered at San 
Antonio de Tachira in the western Andean region, Maracaibo, and 



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Venezuela: A Country Study 

Caracas. Regional commanders, in turn, exercised authority over 
local battalion-sized detachments. Eight mobile detachments func- 
tioned as a reserve force, available for deployment to any area of 
the country in response to threats to internal security or border 
security. FAC personnel also provided static defense of certain pub- 
lic buildings, oil installations, and penal institutions. In addition, 
the FAC patrolled the nation's highway system, functioning as a 
federal police force. 

The FAC was equipped as a light infantry force, with the stan- 
dard FN FAL assault rifle and mortars up to 81mm. Its armored 
assets consisted of forty armored personnel carriers (see table 16, 
Appendix). It also employed seventy- seven small craft for coastal 
and river patrol duties. Air assets included both fixed-wing craft 
and helicopters. 

FAC recruits, all volunteers, underwent a one-year training 
course at the Ramo Verde School at Los Teques. Officer candi- 
dates were required to study for an additional four years at the 
Officers Training School in Caracas. Postgraduate studies for 
officers were available at the Advanced Officers School at Cari- 
cuao, near Caracas. 

Uniforms, Ranks, and Insignia 

Officers of the four services had a series of uniforms, including 
full dress, dress, parade, garrison, work, and field uniforms (the 
last four assigned to all ranks). White and beige cotton uniforms 
were authorized for summer wear. The army winter garrison uni- 
form was dark green, the navy midnight blue, and the air force 
light blue. Cap covers for all navy uniforms were white. Cadet uni- 
forms were distinctive; their parade uniforms consisted of white 
trousers and a single-breasted, high-collar shirt, light grey for the 
Military Academy and dark blue for the others. Cadets at the mili- 
tary, naval, and air force academies wore service caps; cadets at 
the FAC Officers Training School wore shakos similar to those of 
the United States Military Academy. 

The FAN had nine officer ranks: three general, three field grade, 
and three company grade. Ranks from second lieutenant through 
lieutenant colonel were conferred directly by the president. Above 
that level, promotions required the approval of the Senate. There 
were seven enlisted ranks and also eight cadet ranks. 

Army officer rank insignia were silver for officers up to and in- 
cluding captain, gold for higher ranks. All insignia were worn on 
gold shoulder boards. Navy officer rank insignia were rendered 
in gold on black shoulder boards. Air force officer insignia were 
silver up through captain and gold for higher ranks, worn on a 



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blue shoulder board (see fig. 11). Enlisted rank insignia consisted 
of chevrons worn on the sleeve: red with black or gold markings 
for the army; blue with black or gold markings for the air force; 
and black with blue, red, or gold markings for the navy (see fig. 12). 

Internal Security and Public Order 
Threats to Internal Security 

In the early 1990s, Venezuela demonstrated comparative domes- 
tic tranquility by Latin American standards. It did not exhibit the 
severe disturbances of leftist guerrilla insurgency and widespread 
drug trafficking so evident in neighboring Colombia. Generally 
speaking, threats to internal security could be cited as follows: the 
activities of radical leftist student groups and political parties, the 
expansion of drug trafficking and domestic drug abuse, and popular 
discontent resulting from economic restructuring. 

Venezuela has had a number of small radical leftist student groups 
and political parties (see Political Parties, ch. 4). Although the par- 
ties achieved little support among the electorate, student groups 
attracted a more activist membership that sometimes exercised dis- 
proportionate influence among the university population. Student 
demonstrations always had the potential to erupt into violence, 
whether their inspiration was domestic — student privileges or other 
parochial concerns — or foreign, as in protests against United States 
foreign policy. Although university students eventually became the 
political and technocratic leaders of the country, the general pub- 
lic has shown no inclination since the reestablishment of civilian 
democratic rule in 1958 to look to student leadership as a political 
vanguard. In more general terms, the Venezuelan consensus in 
favor of social programs has long had the effect of diluting the ap- 
peal of violent leftist ideology. By the early 1990s, the collapse of 
socialist regimes in Eastern Europe had also had an effect in this 
regard. 

The expansion of illicit drug production and transportation ap- 
peared to have the potential to disrupt Venezuelan internal secu- 
rity significantly in the 1990s. As the decade began, most illegal 
drug activity in Venezuela resulted from a spillover effect from 
Colombia, the world's leading distributor of cocaine. Venezuela's 
long Caribbean coastline and large expanses of sparsely populat- 
ed territory made it attractive as a transshipment point for cocaine 
products in transit from Colombia to the United States. The gravity 
of the security situation along the western border was brought home 
to the Venezuelan public during the presidential election campaign 



203 



Venezuela: A Country Study 



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National Security 








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205 



Venezuela: A Country Study 

of late 1988, when the media publicized an incident that took place 
on October 29 near the town of El Amparo along a tributary of 
the Rio Arauca. What was originally reported as an ambush of 
Colombian guerrillas by Venezuelan troops eventually turned out 
to have been the inadvertent murder of sixteen Venezuelan fisher- 
men. The revelation that security forces had mistakenly fired on 
peaceful residents, then apparently attempted to cover up their er- 
ror, caused a political furor. It also highlighted the increasing con- 
fusion along the frontier that resulted from the activities of drug 
traffickers and Colombian guerrillas. The overreaction of the 
Venezuelan forces also suggested that they were not properly pre- 
pared to deal with the situation. 

Although Venezuela's role in the international drug trade was 
limited in 1990 to the transshipment of drugs and precursor chem- 
icals, there were signs that this role was expanding. In November 
1989, authorities made the largest cocaine seizure in the country's 
history, taking 2,220 kilograms in transit through Valencia. It has 
been estimated that 130 tons of cocaine and basuco (semirefined 
paste) entered the country during 1990. There was no evidence 
that Venezuela was a major drug-producing country in 1990, but 
some marijuana was grown along the Sierra de Perija, in the north- 
western part of Venezuela along the border with Colombia. The 
National Guard has carried out eradication programs in the area, 
with financial and material assistance from the United States. 

The Perez administration appeared to take seriously the threat 
of increased drug activity. In July 1990, the president raised the 
National Drug Commission to the status of a cabinet ministry. In 
November of the same year, the governments of Venezuela and 
the United States signed a bilateral agreement to restrict money 
laundering by Venezuelan banks. Some elements of the FAN as- 
sisted law enforcement agencies in counternarcotics efforts; the 
navy, in particular, stepped up its interdiction activity in conjunc- 
tion with the coast guard. As in other countries, however, the ef- 
fort has been hampered by judicial, and possibly political, 
corruption. In September 1987, a penal judge of the Supreme Court 
was arrested and dismissed after he ordered the release of seven 
drug traffickers in return for a bribe of 10 million bolivars (B; for 
value of the bolivar — see Glossary). At the time, the justice minister 
publicly claimed knowledge of 400 other similar cases of corruption. 

The riots in Venezuelan cities following President Perez's se- 
cond inaugural in February 1989 shocked many Venezuelans and 
made headlines across the world. Many observers described these 
disturbances as a precursor of further violence in heavily indebted 
Third World nations. The riots began in response to government 



206 



Army troops with riot-control helmets and Uzi submachine guns 
Courtesy Embassy of Venezuela, Washington 

austerity measures that included a jump of almost 100 percent in 
domestic gasoline prices and a 30 percent increase in public trans- 
portation fares. In less than a week of rioting and looting, some 
300 Venezuelans died and some 1,800 were wounded. The army 
reinforced police forces in the capital and elsewhere in order to re- 
store order. The riots, which were marked by widespread looting, 
apparently expressed the frustration of the Venezuelan urban poor 
with their lack of economic progress. The disturbances had been 
preceded by a week of student demonstrations, some of which had 
resulted in violence. 

Disturbances of a similar character but more limited scope erupted 
in February and July 1990. The February riots followed student 
protests in Caracas, scheduled to mark the one-year anniversary of 
the 1989 riots. Police contained the looting and sporadic violence. 
President Perez called in National Guard and air force units to re- 
inforce the police in the eastern port cities of Barcelona and Puerto 
La Cruz, where rioting was more intense. Scattered violence in July 
followed another increase in bus fares. The most serious disturbances 
took place in Maracaibo and Maracay. In both instances, university 
students were reported to have been the primary instigators of the 
violence. 



207 



Venezuela: A Country Study 

As of 1990, Venezuela had only one insurgent/terrorist group, 
the Red Flag (Bandera Roja — BR), and it was largely inactive. 
The BR, a splinter group of the Movement of the Revolutionary 
Left (Movimiento de la Izquierda Revolucionaria — MIR), con- 
tinued the armed struggle against the democratic system after the 
MIR put down its arms in 1969. In the early 1980s, the BR staged 
a number of terrorist actions — kidnappings, bank robberies, and 
airline hijackings. Counterstrikes by the police and army eventu- 
ally eliminated BR's urban capabilities and drove the remnants 
of the group into the Colombian frontier region, where some mem- 
bers reportedly still operated, perhaps in association with Colom- 
bian guerrilla groups. 

Law Enforcement Agencies 

Many different organizations carried out Venezuelan law en- 
forcement in 1990. Including the paramilitary National Guard, 
there were four national -level police forces (see The Armed Forces 
of Cooperation [National Guard], this ch.). In addition, over 450 
state and municipal police forces functioned throughout the coun- 
try. Although state and municipal police normally operated indepen- 
dently, they could be mobilized under emergency conditions into 
a Unified Police Command. 

The Directorate of Intelligence and Prevention Services (Direc- 
tion de Seguridad e Inteligencia Policial — Disip) was a nonuniformed 
force of some 3,000 personnel under the Ministry of Interior. Dis- 
ip 's nationwide jurisdiction included the investigation of crimes 
involving subversion, narcotics, and arms smuggling. Disip's 
responsibilities include operations against terrorists and other poten- 
tially violent groups, including organized crime. Disip's director 
was appointed by the minister of interior. The organization main- 
tained its headquarters in Caracas, with field offices in principal 
cities throughout the country. 

The Technical and Judicial Police (Policia Tecnica y Judicial — 
PTJ) was a component of the Ministry of Justice. It fielded over 
3,000 plainclothes personnel in 1990. The PTJ handled most of 
the country's investigative police work; other police agencies passed 
on all cases requiring investigation to the PTJ. The president, on 
the advice of the minister of justice, appointed the organization's 
director, who was required to be a lawyer. Most PTJ personnel 
were assigned to its headquarters in Caracas. Numerous divisions 
and subdivisions throughout the country handled field work. New 
agents were required to have completed at least three years of second- 
ary education and to undergo several months of training at the Na- 
tional Academy in Caracas before assuming their duties. 



208 



National Security 



The Traffic Police was a force of about 2,000 under the Minis- 
try of Transport and Communications. In addition to national 
traffic control, the Traffic Police were responsible for issuing and 
regulating drivers' licenses and for determining public transpor- 
tation routes and services. 

Venezuela's state, metropolitan, and municipal police forces to- 
taled some 18,000 personnel. The largest such force was the 
Metropolitan Police Force of Caracas, with about 9,000 members. 
All local police forces received their funding through the Ministry 
of Interior but responded to state governors under normal condi- 
tions. The Metropolitan Police Force, which maintained a Police 
Academy in El Junquito near Caracas, was comparatively well 
trained. In contrast, other state and municipal forces fielded largely 
untrained personnel and suffered from deficiencies in communi- 
cations, transportation, supplies, and facilities. 

The Criminal Justice System 

Many observers believed that the Venezuelan criminal justice 
system was inadequate to deal with the rising crime rate of the late 
1980s and through 1990. The most glaring deficiency of the sys- 
tem was the high percentage of incarcerated prisoners awaiting trial. 
As of 1989, only some 25 percent of all prisoners had been tried 
and convicted. 

This situation appeared to be attributable to a shortage of judges, 
the automatic review of lower-court decisions, and the general in- 
ability of the courts to keep pace with an increasingly crowded calen- 
dar. The highly bureaucratized court system, which generated thick 
written records for each case, sometimes delayed trials for years. 

The Venezuelan system also suffered from corruption and po- 
litical influences. Although the judiciary was an independent branch 
of government, the system of appointing judges traditionally in- 
troduced political considerations and personal connections into the 
process. A five-member Judicial Council attempted to regulate this 
process by way of its power to nominate, train, and discipline 
judges. One member of the council was named by the Congress, 
one by the president, and three by the Supreme Court. 

The criminal justice system was based largely on Spanish, 
Napoleonic, and Italian influences. Under this system, the bur- 
den of proving innocence fell upon the accused. Defendants theo- 
retically had access to legal representation through the public 
defenders program. In the late 1980s, however, there were only 
350 attorneys employed under this program. This fact further 
delayed legal procedures and made for inadequate representation 
for many prisoners. 



209 



Venezuela: A Country Study 



Venezuelans could be tried for criminal offenses under two 
categories: felonies (delitos) and misdemeanors (faltas). Penalties were 
divided into the categories of corporal and noncorporal. Corporal 
punishment included imprisonment, relegation to a penal colony, 
confinement to a designated place, or expulsion from the country. 
Noncorporal punishments included fines, supervision by the state, 
the loss of civil rights, or the loss of the right to practice a specific 
profession. The death penalty is prohibited under the 1961 consti- 
tution. Venezuelan citizens also cannot be extradited; foreigners 
cannot be extradited for political crimes or for offenses not consid- 
ered crimes under Venezuelan law. 

Military tribunals customarily handled cases involving crimes 
committed by military personnel on military installations or at sea. 
Under a law passed during the guerrilla disturbances of the 1960s, 
however, civilians could be tried under military jurisdiction for 
crimes of armed subversion. The Martial Court, located in the cap- 
ital, was a permanent institution that exercised national jurisdic- 
tion. Decisions by the Martial Court could be appealed to the 
Supreme Court. The preponderance of cases brought against secu- 
rity forces personnel for abuses allegedly committed during the 
riots of February 1989 were remanded to military courts. 

The Prison System 

The Venezuelan prison system, which consisted of twenty-five 
institutions, suffered from overcrowding and understaffing as well 
as from graft and corruption. In the mid-1980s, the annual aver- 
age prison population was about 15,000, exceeding the intended 
capacity of the system. As a result, prison conditions generally were 
inadequate, and prisoners commonly endured hardship and some- 
times were subjected to physical abuse. As the national crime rate 
rose during the 1980s, the problems of the prison system became 
more acute. 

The twenty-five prisons were essentially of three kinds: judicial 
detainment centers, which numbered seventeen; national jails and 
penitentiaries, which numbered seven; and the National Institute 
of Female Orientation located in Los Teques. Ostensibly, the pris- 
ons were designed to house those awaiting trial, those convicted, 
and women, respectively. In fact, however, several of the prisons 
had separate wings for each kind of inmate, although Los Teques 
housed the majority of female inmates and contained no males. 
Minors were interned in separate institutions. Prisons were staffed 
by civilian employees of the Ministry of Justice, although exterior 
guard duty was entrusted to National Guard personnel. 



210 



Inmates at the San Juan de los Morros Penitentiary gathering corn 
Courtesy United Nations (J. Littlewood) 

By law the rehabilitation of convicted criminals was based on 
their having meaningful work, an opportunity to receive at least 
a minimal education, and adequate medical assistance and living 
conditions. In fact, however, the overcrowded conditions precluded 
rehabilitation efforts. The idleness of many inmates, it is theorized, 
led to corruption, drug abuse, and homosexuality, all of which were 
growing problems in the prisons. One large Caracas prison had 
an entire wing that housed homosexuals exclusively. 

Conditional liberty was granted to prisoners who had served at 
least three-fourths of their sentence and had a favorable conduct 
record. Prisoners who reached seventy years of age and had com- 
pleted half their sentence were eligible for conditional liberty. 
Several organizations existed to help prisoners who had been 
released to find jobs and readjust to society. Nevertheless, the ex- 
convict encountered a generally hostile society on the outside, and 
the high rate of criminal repeaters was attributed largely to the stig- 
ma attached to the ex-convict. 

The criminal justice system represented a glaring example of an 
area that lagged behind the many other comparative advances in 
Venezuelan society during the latter half of the twentieth century. 
Given the government's emphasis on reforming the bureaucratic 
structure that underlay the nation's economic shortcomings, it did 



211 



Venezuela: A Country Study 

not appear that judicial reform would be accorded a high priority 
during the 1990s. As with most of Venezuela's problems, however, 
the resources existed with which to effect reforms. Only the politi- 
cal will and the legislative procedure remained to be hammered out. 

* * * 

Aside from the section on Venezuela in Adrian English's Armed 
Forces of Latin America, there is no comprehensive source in English 
on the Venezuelan armed forces. Good historical background can 
be gleaned from WinfieldJ. Burggraaff s The Venezuelan Armed Forces 
in Politics, 1935-1959. David J. Myers's Venezuela's Pursuit of Carib- 
bean Basin Interests is an excellent overview of the country's strategic 
situation and thinking. Jacqueline Anne Braveboy- Wagner in The 
Venezuela-Guyana Border Dispute: Britain 's Colonial Legacy in Latin America 
and John D. Martz in his article " National Security and Politics: 
The Colombian- Venezuelan Border" effectively address Venezue- 
la's border disputes. Robert E. Looney has produced good studies 
of Venezuelan military expenditures from an economic standpoint. 
Several periodicals occasionally report on technical and organiza- 
tional developments within the FAN. These include Jane's Defence 
Weekly, Military Technology, and Defense and Foreign Affairs. (For fur- 
ther information and complete citations, see Bibliography.) 



212 



Appendix 



Table 

1 Metric Conversion Coefficients and Factors 

2 Population by Administrative Division, 1971, 1981, and 1985 

3 Population Density by Administrative Division, 1971 and 1985 

4 Population of the Largest Cities, 1971 and 1981 

5 Schools, Teachers, and Enrollments by Public and Private In- 

stitution, 1974-75 and 1983-84 

6 Mortality Rate for the Ten Most Common Causes of Death, 

1973 and 1981 

7 Medical Facilities and Personnel, Selected Years, 1974-81 

8 Consumer Prices, 1986-90 

9 Oil Production, 1985-90 

10 Petroleum Refining Capacity of the Venezuelan Petroleum 

Corporation, 1988 

11 Trade and Current Account Statistics, 1985-89 

12 External Debt, 1985-89 

13 Major Army Equipment, 1990 

14 Major Navy and Coast Guard Equipment, 1990 

15 Major Air Force Equipment, 1990 

16 Major Armed Forces of Cooperation Equipment, 1990 



213 



- — «- 



Appendix 



1 able 1. 


Metric Conversion Coefficients and Factors 


When you know 


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To find 




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0.39 


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215 



Venezuela: A Country Study 



Table 2. Population by Administrative Division, 
1971, 1981, and 1985 
(in thousands) 



State, Territory, or District 


1971 1 


1981 1 


1985 2 




22 


46 


71 




506 


684 


783 




165 


188 


231 




543 


892 


1,109 




231 


326 


413 


Bolivar 


392 


668 


824 




659 


1,062 


1,341 




94 


134 


166 


Delta Amacuro Territory 


48 


57 


83 




408 


504 


576 




1,861 


2,071 


2,451 


Guarico 


319 


393 


439 




671 


945 


1,096 




347 


459 


552 




856 


1,421 


1,714 




298 


389 


452 




119 


197 


236 


Portuguesa 


297 


425 


519 




469 


586 


676 




511 


660 


765 




381 


434 


507 




224 


301 


340 


Zulia 


1,299 


1,674 


1,982 


TOTAL .......................... 


10,720 


14,516 


17,326 



1 Census figures. 

2 Midyear estimates. 



Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt, 
Landerbericht Venezuela, 1987, Wiesbaden, 1987, 19. 



216 



Appendix 



Table 3. Population Density by Administrative 
Division, 1971 and 1985 
(inhabitants per square kilometer) 



State, Territory, or District 


1971 1 


1985 2 




0.1 


0.4 




11.7 


18.1 




2.2 


3.0 




77.4 


158.1 




6.6 


11.7 




1.6 


3.5 




141.7 


288.4 




6.4 


11.2 




1.2 


2.1 


Falcon 


16.5 


23.2 




964.2 


1,269.9 




4.9 


6.8 




33.9 


55.4 




30.7 


48.8 




107.7 


215.6 




10.3 


15.6 




103.5 


205.2 




19.5 


34.1 




39.7 


57.3 




46.0 


68.9 




51.5 


68.5 




31.5 


47.9 




20.6 


31.4 



1 Census figures. 

2 Midyear estimates. 

Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt, 
Landerbericht Venezuela, 1987, Wiesbaden, 1987, 19. 



217 



Venezuela: A Country Study 



Table 4. Population of the Largest Cities, 
1971 and 1981 
(in thousands) 



City 


1971 1 


1981 1 


Caracas 






City limits 


1,035 


1,817 


Metropolitan area 


2,184 


2,944 2 


Total Caracas 


3,219 


4,761 


Maracaibo 


652 


889 


Valencia 


367 


616 


Barquisimeto 


331 


497 


Maracay 


255 


440 


San Cristobal 


152 


199 


Cumana 


120 


192 


Ciudad Bolivar 


104 


182 


Maturin 


98 


155 



1 Census figures. 

2 1980 figure. 

Source: Based on information from Federal Republic of Germany, Statistisches Bundesamt, 
Landerbericht Venezuela, 1987, Wiesbaden, 1987, 19. 



218 



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219 



Venezuela: A Country Study 



Table 6. Mortality Rate for the Ten Most Common 
Causes of Death, 1973 and 1981 
(in percentages) 



Oauses of Death 


1Q73 






10.9 


14.8 




7.9 


9.4 


Accidents 


7.8 


11.7 




7.5 


3.8 




6.7 


7.5 




6.6 


4.7 




4.5 


5.5 


Suicides and homicides 


2.1 


2.7 




1.6 


1.9 




1.4 


2.2 



Source: Based on information from Hernan Castellano Mendez, Aproximacion a la salud de 
la Venezuela del siglo XXI, Caracas, 1985, 77-84; Venezuela, Ministerio de Sanidad 
y Asistencia Social, Anuario de epidemiologtay estadistica del Ministerio de Sanidad y Asistencia 
Social, Caracas, 1973; and Anuario de epidemiologic y estadistica del Ministerio de Sanidad 
y Asistencia Social, Caracas, 1981. 



220 



Appendix 



Table 7. Medical Facilities and Personnel, Selected Years, 1974-81 





1974 


1976 


1978 


1979 


1981 




353 


n.a. 


444 


n.a. 


446 




34,263 


36,163 


41,386 


40,575 


n.a. 


Inhabitants per hospital bed . . . 


345 


n.a. 


n.a. 


378 


n.a. 




13,017 


n.a. 


14,771 


15,368 


n.a. 




908 


n.a. 


1,004 


999 


n.a. 




3,439 


n.a. 


4,342 


n.a. 


n.a. 


Inhabitants per dentist 


3,435 


n.a. 


3,417 


n.a. 


n.a. 




3,175 


3,187 


3,187 


n.a. 


n.a. 


Registered nurses 


8,426 


8,833 


9,077 


n.a. 


11,885 




22,993 


26,804 


29,984 


n.a. 


n.a. 




2,503 


* 


* 


n.a. 


n.a. 



n.a. — not available. 

• 1977 figure was 1,200. 

Source: Based on information from Federal Republic of Germany, Statistiches Bundesamt, 
Landerbericht Venezuela, 1987, Wiesbaden, 1987, 11, 23 



221 



Venezuela: A Country Study 



Table 8. Consumer Prices, 1986-90 



1986 1987 1988 1989 1990 



Average consumer price 

index 124.3 159.2 206.1 380.2 534.8 

Percent change from previous 

year 11.6 28.1 29.5 84.5 40.7 

Percent change in 

wholesale prices 20.1 48.1 17.0 106.2 n.a. 



n.a. — not available. 

Source: Based on information from Economist Intelligence Unit, Country Profile: Venezuela, 
Suriname, Netherlands Antilles, 1990-91, London, 1991, 14; and information provided 
by United States Embassy, Caracas. 



Table 9. Oil Production, 1985-90 
(in thousands of barrels per day) 



Liquefied 

Year Crude Condensates Natural Gas Refined 



1985 1,558 119 63 864 

1986 1,626 152 102 903 

1987 1,556 176 83 797 

1988 1,680 188 109 1,095 

1989 1,812 112 112 942 

1990 2,357 37 114 993 



Source: Based on information provided by United States Embassy, Caracas. 



Table 10. Petroleum Refining Capacity of the 




Venezuelan Petroleum Corporation, 


1988 




(in thousands of barrels per day) 




Subsidiary and Location 


Capacity 


Processing 


Lagoven 








600 


415 




Maraven 








291 


286 


Corpoven 








195 


129 




110 


110 




5 


5 


TOTAL 


1,201 


945 



Source: Based on information from Economist Intelligence Unit, Country Profile: Venezuela, 
Suriname, Netherlands Antilles, 1989-90, London, 1990, 21. 



222 



Appendix 



Table 11. Trade and Current Account Statistics, 1985-89 
(in millions of United States dollars) 





1985 


1986 


1987 


1988 


1989 2 


Merchandise imports 












(f-o.b.) 1 


7,501 


7,862 


8,832 


10,872 


7,145 


Merchandise exports 












(f-o.b.) 1 


14,283 


9,122 


10,567 


10,114 


12,935 




6,782 


1,260 


1,735 


-758 


5,790 


Current account balance .... 


3,327 


- 1,471 


- 1,125 


- 4,692 


2,295 



1 f.o.b. — free on board. 

2 Preliminary. 

Source: Based on information from United States, Department of Commerce, Foreign Eco- 
nomic Trends and Their Implications for the United States: Venezuela, Washington, 1989, 
2; United States, Department of Commerce, Foreign Economic Trends and Their Im- 
plications for the United States: Venezuela, Washington, 1990, 1; and Economist Intel- 
ligence Unit, Country Profile: Venezuela, Suriname, Netherlands Antilles, 1990-91, London, 
1991, 36. 



Table 12. External Debt, 1985-89 
(in millions of United States dollars) 





1985 


1986 


1987 


1988 


1989 1 




35,240 


34,550 


35,205 


34,657 


34,108 




17,645 


25,241 


25,088 


25,413 


26,177 




4,740 


5,088 


4,743 


5,512 


6,497 




27.0 


42.8 


37.4 


43.0 


44.4 


Private debt as a 












percentage of total 














24.5 


22.4 


17.3 


14.1 


12.6 


Short-term debt as a 












percentage of total 














25.4 


4.6 


11.5 


12.6 


8.3 



1 Estimated. 

2 In percentages. 



Source: Based on information from Economist Intelligence Unit, Country Profile: Venezuela, 
Suriname, Netherlands Antilles, 1990-91, London, 1991, 39. 



223 



Venezuela: A Country Study 

Table 13. Major Army Equipment, 1990 

Type and Description Country of Origin In Inventory 



Tanks 





. . • France 


oi 


A \yf Y 1 1 (\'mt\\*\ 


An 

. . . -QO- 


"in 

DO 


\A 1 Q /"lirrkA 


. . . united otates 


3D 


Armored personnel carriers 






A X/fY-VP'T 


. . . r ranee 


i.0 


V-100 


• • • vJIlllCU OLctlCs 


70 


\7 1 ^ft 


An 

. . . -do- 


ou 


\/f 1 il 


An 

. . . -do- 




Self-propelled artillery 








An 

. . . -do- 


1 C\ 


MKF3 fl^mm^ 


France 


20 


Field artillery 






Model % 


Italy 


40 


M-101 


TTniteH States 


30 


lvlUllipiC "IUUKCl laUIlLIlCI a 






T AR<? AMV-I'! nfiflmm^ 


• • • 1M del/ F I dllLC 




Fixed-wing aircraft 






DM 


T» • ' 

. . . Britain 


i 
i 


P occno 1 70 


• . . United States 


Q 


Poppmi 1 QO 


.An. 

. . . QO- 


Q 

■J 




An 

. . . -oo- 


O 




-do- 


1 




-do- 


1 


Super King Air 200 


-do- 


1 


G-222 


Italy 


2 


Helicopters 






A-109 


Italy 


6 


AS-61R 


United States/Italy 


4 


Bell 205 


United States 


3 


UH-1H 


-do- 


6 


Bell 476 


-do- 


2 


Bell 206 


-do- 


2 



224 



Appendix 



Table 14. Major Navy and Coast Guard Equipment, 1990 



Type and Description 



Country of Origin 



In Inventory 



Navy 

Submarines 

209 class (type 1300) 

Guppy II class 

Frigates 

Lupo class 

Amphibious craft 

Capana class 

Terrebonne Paris class . . . . 

Utility landing craft (LCUs) 
Patrol craft 

LCVP landing craft 

Shipborne aircraft (helicopters) 

Agusta AB12 antisubmarine 

warfare aircraft 

Land-based maritime aircraft 

CASA C-212A/MR 

Grumman S-2E Tracker . . 
Coast Guard 
Patrol craft 

Almiante Clemente class . . . 

Constitution class 

Cherokee class 



West Germany 
United States 

Italy 

United States 
-do- 
-do- 

Venezuela 



Italy 

Spain 
United States 



Italy 
Britain 
United States 



2 
1 

5 

4 

2 

12 

10 

4 

6 



225 



Venezuela: A Country Study 

Table 15. Major Air Force Equipment, 1990 

Type and Description Country of Origin In Inventory 



Fighters 



F-16A 




18 


F-16B 


-do- 


6 


CF-5A 


-do- 


10 


CF-5B 


-do- 


2 


Mirage 50 


France 


7 


Mirage IIIEV 


-do- 


18 


Mirage 5V 


-do- 


2 


Mirage 5DV 


-do- 


1 


Bombers 










18 


Counterinsurgency 






EMB-312 


Brazil 


18 


OV-10E Broncos 




14 


Reconnaissance 






Canberra PR-83 




3 


Transports 






C-47 




5 


C-123 


-do- 


7 


C-130H 


-do- 


6 


G-222 


Italy 


6 


Trainers 






EMB-312 




18 


T-2D 


United States 


19 


T-52 


-do- 


12 


T-34 


-do- 


23 


Attack helicopters 






SA-316 




10 


UH-1D 


United States 


12 


UH-1H 


-do- 


4 


Transport helicopters 






Bell 206 


-do- 


16 


Bell 412 


-do- 


2 


UH-1N 


-do- 


2 


HB-350B 




5 



226 



Appendix 



Table 16. Major Armed Forces of Cooperation Equipment 



Type and Description Country of Origin In Inventory 



Armored personnel carriers 

UR-416 West Germany 25 

Shorland France 15 

Fixed-wing aircraft 

Beechcraft Baron United States 1 

Cessna 4206 -do- 1 

Cessna 337 -do- 2 

Cessna 402C -do- 1 

King Air 90 -do- 1 

King Air 200C -do- 1 

Queen Air 80 -do- 2 

BN-2A Britain 1 

IAI-201 Israel 4 

Helicopters 

A- 109 Italy 4 

Bell 206 United States 15 

Bell 214ST -do- 2 

Coastal patrol craft 

Type A Italy/Venezuela 28 

Bertram type United States 12 

Monark type -do- 12 

River patrol craft 

Lago class -do- 10 

Monark type -do- 15 



227 



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Investigaciones, 1968. 

Tugwell, Franklin. The Politics of Oil in Venezuela. Stanford: Stan- 
ford University Press, 1975. 

United States. Department of State. Background Notes: Venezuela. 
Washington: April 1987. 

Uslar Pietri, Arturo. Sumario de la Economia Venezolana. Caracas: 
Fundacion Mendoza, 1958. 

Vallenilla, Luis. Oil, the Making of a New Economic Order: Venezuelan 
Oil and OPEC. New York: McGraw Hill, 1975. 

Zchock, Dieter K., et al. "The Education- Work Transition of 
Venezuelan University Students, " Journal of Inter-American Studies 
and World Affairs, 16, February 1974, 96-118. 

(Various issues of the following publication were also used in 
the preparation of this chapter: Foreign Broadcast Information Ser- 
vice, Daily Report: Latin America.) 



247 



Venezuela: A Country Study 



Chapter 5 

Anderson, Robert Bruce. "Civilian Control of Professionalizing 
Militaries: Implications of the Venezuelan Case." (Ph.D. dis- 
sertation.) (University Microfilms Doctoral Dissertation Series, 
No. AAC8520819.) Denver, Colorado: University of Denver, 
June 1985. 

Braveboy-Wagner, Jacqueline Anne. The Venezuela- Guyana Border 
Dispute: Britain's Colonial Legacy in Latin America. Boulder, Colora- 
do: Westview Press, 1984. 

Burggraaff, Winfield J. The Venezuelan Armed Forces in Politics, 
1935-1959. Columbia: University of Missouri Press, 1972. 

Caffrey, Dennis F. "The Inter- American Military System: Rhetoric 
vs. Reality." Pages 41-59 in Georges Fauriol (ed.), Security in 
the Americas. Washington: National Defense University Press, 
1989. 

Child, Jack. "Geopolitical Conflicts in South America." Pages 
309-27 in Georges Fauriol (ed.), Security in the Americas. Washing- 
ton: National Defense University Press, 1989. 

English, Adrian J. Armed Forces of Latin America: Their Histories, De- 
velopment, Present Strength, and Military Potential. London: Jane's, 
1984. 

Fauriol, Georges (ed.). Security in the Americas. Washington: Na- 
tional Defense University Press, 1989. 

Gil Yepes, Jose Antonio. "Political Articulation of the Military 
Sector in Venezuelan Democracy." Pages 148-82 in John D. 
Martz and David J. Myers (eds.), Venezuela: The Democratic Ex- 
perience. (Rev. ed.) New York: Praeger, 1986. 

Hazleton, William A. "Colombian and Venezuelan Foreign Policy: 
Regional Powers in the Caribbean Basin." Pages 245-75 in 
Donald L. Herman (ed.), Democracy in Latin America: Colombia 
and Venezuela. New York: Praeger, 1988. 

Herman, Donald L. Democracy in Latin America: Colombia and Venezue- 
la. New York: Praeger, 1988. 

Looney, Robert E. The Political Economy of Latin American Defense 
Expenditures: Case Studies of Venezuela and Argentina. Lexington, Mas- 
sachusetts: Lexington Books, 1986. 

Martz, John D. "National Security and Politics: The Colombian- 
Venezuelan Border," Journal of Inter-American Studies and World 
Affairs, 30, No. 4, Winter 1988-89, 117-38. 

Melendez Melendez, Lila. {Que es el Servicio Militar Feminino y en 
que Consiste la Instruccidn Premilitar? Caracas: Miguel Angel Gar- 
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for Strategic Studies, 1990. 

Millan, Victor, and Michael A. Morris. Conflicts in Latin America: 
Democratic Alternatives in the 1990s. (Conflict Studies Series, No. 
230.) London: Research Institute for the Study of Conflict and 
Terrorism, April 1990. 

Muller Rojas, Albert. "Equipamiento Militar, Politica de Defen- 
sa y Politica Exterior: El Caso Venezolano," Politica Internacional 
[Caracas], No. 2, April-June 1986, 22-33. 

Myers, David J. Venezuela's Pursuit of Caribbean Basin Interests: Im- 
plications for United States National Security. Santa Monica, Califor- 
nia: Rand, January 1985. 

Premo, Daniel L. "Coping with Insurgency: The Politics of Pacifi- 
cation in Colombia and Venezuela." Pages 219-44 in Donald 
L. Herman (ed.), Democracy in Latin America: Colombia and Venezue- 
la. New York: Praeger, 1988. 

Riva, Joseph P. , Jr. Venezuelan Petroleum: A Source of Increasing U.S. 
Imports? (Congressional Research Service Report for Congress 
Series, No. 90-70 SPR.) Washington: Science Policy Research 
Division, Congressional Research Service, Library of Congress, 
February 2, 1990. 

Rouquie, Alain. The Military and the State in Latin America. Berkeley: 
University of California Press, 1987. 

Schaposnik, Eduardo C. La Democratizacion de las Fuerzas Armadas 
Venezolanas. Caracas: Instituto de Investigaciones Sociales, 1985. 

United States. Congress. 97th, 2d Session. Senate. Committee on 
Foreign Relations. Proposed Sale of F-16s to Venezuela. Washing- 
ton: GPO, 1982. 

Varas, Augusto. Militarization and the International Arms Race in La- 
tin America. (Foreign Relations of the Third World Series.) Boul- 
der, Colorado: Westview Press, 1985. 

Venezuela. Ministerio de la Defensa. Leyesy Reglamentos. (2 vols.) 
Caracas: 1983. 

Ministerio de la Defensa. Memoriay Cuenta, 1986. Cara- 
cas: 1987. 

Ministerio de la Defensa. Memoriay Cuenta, 1987. Cara- 
cas: 1988. 

Ministerio de la Defensa. Memoriay Cuenta, 1988. Cara- 
cas: 1989. 

(Various issues of the following publications were also used in 
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the Atomic Scientists; Christian Science Monitor; Defence [London]; Defense 
and Foreign Affairs Weekly; Europa World Year Book [London]; Facts 



249 



Venezuela: A Country Study 



on File; Foreign Broadcast Information Service, Daily Report: Latin 
America; Fuerzas Armadas de Venezuela [Caracas]; Insight; Internation- 
al Narcotics Control Strategy Report; Jane's Defence Weekly [London]; 
Keesing's Contemporary Archives [London]; Keesing's Record of World 
Events [London]; Latin American Weekly Report [London]; Latin Ameri- 
can Monitor; Politica Internacional [Caracas]; Proceedings; Problems of 
Communism; Tecnologia Militar [Madrid]; Times of the Americas; El 
Universal [Caracas]; Washington Post; and World Military Expenditures 
and Arms Transfers. ) 



250 



Glossary 



Andean Common Market (Ancom) — A free-trade association 
formed in 1969 by Bolivia, Chile, Colombia, Ecuador, and 
Peru. Venezuela joined the organization in 1973. Chile with- 
drew in 1977. Also known as the Andean Pact or the Andean 
Group (Grupo Andino). 

bolivar (B) — Venezuela's monetary unit, divided into 100 centi- 
mos. The bolivar traded at a fixed rate of B4.29 = US$1 from 
1976 to 1983, but was devalued officially several times between 
1983 and 1989. The 1989 devaluation established a floating 
rate at B36 = US$1; by late 1990, the rate had reached 
B43 = US$1. 

Caribbean Basin — Broad geopolitical region encompassing all na- 
tions and dependencies in or bordering on the Caribbean Sea, 
thus including the Caribbean islands, northern South Ameri- 
ca, Central America, Mexico, and the United States. 

Contadora Group — The "core-four" nations — Colombia, Mexi- 
co, Panama, and Venezuela — that in a January 1983 meeting 
on Contadora Island (off the Pacific coast of Panama) launched 
a diplomatic initiative to prevent through negotiations a regional 
conflagration among the Central American states of Guatemala, 
El Salvador, Honduras, Nicaragua, and Costa Rica. In Sep- 
tember 1984, the negotiating process produced a draft treaty, 
the Contadora Acta, which was judged acceptable by the 
government of Nicaragua but rejected by the other four Cen- 
tral American states concerned. The governments of Peru, Uru- 
guay, Argentina, and Brazil formed the Contadora Support 
Group in 1985 in an effort to revitalize the faltering talks. The 
process was suspended unofficially in June 1986 when the Cen- 
tral American governments refused to sign a revised Acta. The 
Contradora process was effectively superseded by direct negoti- 
ations among the Central American states. 

encomienda — A system whereby the Spanish crown granted rights 
over Indian labor and tribute to individual colonists (encomen- 
deros), who in turn undertook to maintain order and to 
propagate Christianity among the Indians. It ended officially 
in 1687. 

fiscal year (FY) — Calendar year. 

General Agreement on Tariffs and Trade (GATT) — An internation- 
al organization established in 1948 and headquartered in Ge- 
neva that serves as a forum for international trade negotiations. 



251 



Venezuela: A Country Study 

GATT members pledge to further multilateral trade by reduc- 
ing import tariffs, quotas, and preferential trade agreements 
and promise to extend to each other any favorable trading terms 
offered in subsequent agreements with third parties. 

Gran Colombia (Republic of) — Declared independent of Spain in 
1821. Consisted of present-day Venezuela, Colombia, Ecuador, 
and Panama. Venezuela seceded from it in 1829. 

gross domestic product (GDP) — A measure of the total value of 
goods and services produced by the domestic economy during 
a given period; usually one year. Obtained by adding the value 
contributed by each sector of the economy in the form of profits, 
compensation to employees, and depreciation (consumption of 
capital). The income arising from investments and possessions 
owned abroad is not included. Hence, the term domestic is used 
to distinguish GDP from gross national product (q.v.). 

gross national product (GNP) — Total market value of all final goods 
and services produced by an economy during a year. Obtained 
by adding gross domestic product (q. v. ) and the income received 
from abroad by residents less payments remitted abroad to non- 
residents. 

International Monetary Fund (IMF) — Established along with the 
World Bank (q.v.) in 1945, the IMF is a specialized agency 
affiliated with the United Nations that takes responsibility for 
stabilizing international exchange rates and payments. The 
main business of the IMF is the provision of loans to its mem- 
bers when they experience balance of payments difficulties. 
These loans often carry conditions that require substantial in- 
ternal economic adjustments by the recipients. 

liberation theology — An activist movement led by Roman Catholic 
clergy who trace their inspiration to Vatican Council II (1965), 
where some church procedures were liberalized, and the Sec- 
ond Latin American Bishops' Conference in Medellm, Colom- 
bia (1968), which endorsed greater direct efforts to improve 
the lot of the poor. 

llanos — Plains region that runs in a broad band across central 
Venezuela. Residents referred to as llaneros. 

pardo(s) — Person(s) of mixed racial origin, including any combi- 
nation of European, Indian, and African antecedents. 

rancho(s) — An urban shelter, or shanty, constructed of makeshift 
materials, generally by the occupant. 

trienio — A three-year period, usually refers to the 1945-48 democrat- 
ic government. 



252 



Glossary 



World Bank — The informal name used to designate a group of three 
affiliated international institutions: the International Bank for 
Reconstruction and Development (IBRD), the International 
Development Association (IDA), and the International Finance 
Corporation (IFC). The IBRD, established in 1945, has the 
primary purpose of providing loans to developing countries for 
productive projects. The IDA, a legally separate loan fund ad- 
ministered by the staff of the IBRD, was set up in 1960 to fur- 
nish credits to the poorest of developing countries on much 
easier terms than those of conventional IBRD loans. The IFC, 
founded in 1956, supplements the activities of the IBRD 
through loans and assistance designed specifically to encourage 
the growth of productive private enterprises in less-developed 
countries. The president and certain senior officers of the IBRD 
hold the same positions in the IFC . The three institutions are 
owned by the governments of the countries that subscribe their 
capital. To participate in the World Bank group, member states 
must first belong to the International Monetary Fund (q.v.). 



253 



Index 



Action Democratica (AD). See Democratic 
Action 

acquired immune deficiency syndrome 

(AIDS), 75 
AD. See Democratic Action 
Advanced Officers School, 202 
agrarian reform {see also land reform), 
164-65; under Caldera, 29; inadequacy 
of, 61, 155 
Agrarian Reform Law (1960), 91 
Agricultural and Livestock Development 

Bank (Bandagro), 116, 117 
agricultural extension services, 71, 96 
agricultural production: under Caldera, 
29; decline in, 15, 81; expansion of, 82 
agricultural products, 92-95; cash crops, 
94-95; corn, 92; cotton, 94; export of, 
41, 94; food crops, 92-94; fruits, 93-94; 
imports of, 92; legumes, 93; oilseeds, 
94, 95; rice, 92-93, 96; sorghum, 92; 
sugarcane, 94; tobacco, 7; tubers, 93; 
vegetables, 93; wheat, 7 
agriculture, 89-97; under colonial rule, 
6-7; credit subsidies for, 126; export, 
13, 89; financing for, 117; geographi- 
cal distribution of, 45; under Gomez, 
51; government policies toward, 89, 
153; growth rate of, 90; under 
Guzman, 13; impact of, on imports, 
92; impact of urban migration on, 92; 
labor force in, 87, 89; land area suitable 
for, 91; land policies, 90-92; lobby, 
160; under Lusinchi, 84; as percentage 
of gross domestic product, 89; technol- 
ogy in, 95-96 
AIDS. See acquired immune deficiency 
syndrome 

air force, 192, 200-201; aircraft of, 
200-201; bombing of Caracas by, 
22-23; granted autonomy, 180; insig- 
nia, 202, 203, 204, 205; internal secu- 
rity duty, 207; organization of, 201; 
under Perez, 181; personnel in, 201; 
ranks of, 202; training in, 201; uni- 
forms, 202 

airline, national, 33 

airports, 122 

air transportation, 122 



Ajaguan people, 48 
Alcasa, 106 
Alfonso XII, 188 

aluminum, 81, 113; export of, 125; 

production of, 143 
aluminum industry, xxii, 81, 112; 

foreign-exchange earnings from, 105; 

investment in, 130; production, 106 
Alunasa, 106 
Alusuisse, 106 
Amazonas territory, 137 
Amazon River, 46 

Ancom. See Andean Common Market 

Andean Common Market (Ancom), 28, 
170; entrance into, 29-30, 126; imports 
from, 124-25 

Andean countries: financial aid to, 31 

Andean Development Corporation, 126 

Andean Reserve Fund, 130 

Andean Satellite Corporation (CON- 
DOR), 123 

Angel Falls, 45 

Ankoko Island, 190 

ANSA. See Italian News Agency 

Anzoategui: petrochemical complex in, 
103 

AP. See Associated Press 

Aragua, xxiv 

Arawak people, 48 

Argentina: relations with, 169, 171 

Aristide, Jean-Bertrand, xxv 

armed forces: administration of, 196-97; 
border control by, 156, 165; chain of 
command, 197; civic-action projects of, 
193-94; conditions in, 24; conflict with- 
in, xxv-xxvi; co-optation of, 156; in 
coup d'etat of 1948, 20; deployment of, 
197; foreign training missions, 179; his- 
tory of, 177-82; impact of oil on, 177; 
insignia of, 202-3, 204-5; influence of 
political parties on, xxii-xxiii; internal 
security under, xxiii; lobbying by, 182; 
missions of, 165, 183, 192-94; National 
Security Police as threat to, 181; oppo- 
sition of, to Perez, 22; participation by, 
in United Nations peacekeeping mis- 
sion, 170; under Perez, 181; political 
influence of, 165; political involvement 



255 



Venezuela: A Country Study 



of, 155-56, 182; political pressures on, 
192; presidential control of, 141; profes- 
sionalization of, 179; ranks of, 202; 
regions of, 197; responsibilities of, 193; 
role of, 179, 193; role of women in, 
194-95; service in, 24; social welfare 
under, 179; uniforms of, 202; upris- 
ings, 26 

Armed Forces of Cooperation (FAC) (Na- 
tional Guard), 147, 189, 201-2; chain 
of command in, 201-2; efforts of, 
against drug trafficking, 194, 206; in- 
ternal security duty, 207, 208; materiel 
of, 202; missions of, 194, 210; organi- 
zation of, 201; personnel in, 201; train- 
ing of, 202 

Armed Forces of National Liberation 
(FALN), 26, 161 

army, 9, 198-99; under Castro, 178-79; 
chain of command, 178-79; deploy- 
ment, 198-99; disbanded, 178; foreign 
training of, 14; general staff of, 178-79; 
under Gomez, 179; innovations in, 
178-79; insignia, 202, 203, 204, 205; 
materiel, 199; organization of, 198-99; 
personnel, 198; as political support, 14; 
prestige, 198; ranks, 202; reestablished, 
178; training, 199; uniforms, 202 

Associated Press (AP), 166 

associations, professional, 159, 165; po- 
litical power of, 159-60 

Audiencia de Santa Fe de Bogota , 6 

Audiencia de Santo Domingo, 6 

Audiencia de Venezuela, 8 

Authentic Renovating Organization, 163 

automobile industry, 112; output of, 
112-13 

automobiles, 121 

autonomous entities, 85; under industri- 
al development, 33 
Ayaman people, 48 



balance of payments, 127-28; deficit, 127; 
fluctuations in, 127; in the 1980s, 127; 
problems with, 36; under restructuring, 
125 

Banap. See National Savings and Loan 
Bank 

Banco Central de Venezuela (BCV). See 

Central Bank of Venezuela 
Banco de Desarrollo Agropecuario (Ban- 



dagro). See Agricultural and Livestock 

Development Bank 
Banco de Venezuela, 116 
Banco Industrial de Venezuela (BIV). See 

Industrial Bank of Venezuela 
Banco Italo-Venezolano, 116 
Banco Latino, 116 
Banco Mercantil, 116 
Banco Nacional de Ahorro y Prestamo 

(Banap). See National Savings and Loan 

Bank 

Banco Occidental de Descuento, 116-17 

Banco Provincial, 116 

Banco Republica, 116 

Bandagro. See Agricultural and Livestock 

Development Bank 
Bandera Roja (BR). See Red Flag 
bank, central, 17 
Bank Advisory Committee, 129 
Bankers' Association, 160 
banking lobby, 160 

banks: agricultural, 17; foreign, 116; in- 
dustrial, 17; mortgage, 117-18; public- 
sector, 116 

banks, commercial, 96; debt to, 129; 
lending policies, 116; loans from, 
34-35; number of, 116 

banks, development, 17, 96; funding, 
117; number of, 117; specialized ser- 
vices of, 117 

Barinas Province, 6 

Barinas state, 92 

Barquisimeto: concentration of popula- 
tion in, 52; population of, 53; schools 
in, 74 
Barrios, Gonzalo, 28 
Battle of Carabobo, 11 
Bauxita de Venezuela (Bauxiven), 105 
bauxite, xxii; production, 105-6; re- 
serves, 105 
Bauxiven. See Bauxita de Venezuela 
BCV. See Central Bank of Venezuela 
BDN. See Democratic National Bloc 
beef: export of, 50 

Belgian Aleurope Aluminum Company, 
106 

Betancourt, Romulo, 16, 17, 23, 136, 
162, 180; attempted coup against, 156; 
co-optation of military by, 183; election 
of, 138; exiled, 20, 163; as president, 
19, 167, 182 

Betancourt administration, 24, 141; cabi- 
net in, 142; economy under, 27; foreign 



256 



Index 



policies of, 26, 169-70; junta under, 19; 

opposition to, 182; protests against, 26; 

students' role in, 161 
Betancourt Doctrine, 27, 29, 169 
Betancur Cuartas, Belisario, 185 
Bethlehem Steel, 106 
Bitumenes del Orinoco. See Orinoco 

Asphalt 

BIV. See Industrial Bank of Venezuela 
blacks, 49; in independence movement, 
50; as percentage of population, 63; so- 
cial status of, 64 
Bloque Democratico Nacional (BDN). See 

Democratic National Bloc 
Bolivarian Movement, xxvii-xxviii 
Bolivar Palacios, Simon, xxi, 3, 9-10, 50, 
61, 166; background of, 10; exiled, 10; 
as liberator, 135, 139, 168, 178; as 
president, 10, 11; public education 
goals of, 70-71 
Bolivar state; gold in, 110; resettlement 
in, 56 

Bolivia, 11; economic policies, 127; im- 
ports from, 125 

Bonaparte, Joseph > 9 

Bonaparte, Napoleon, 9 

borders: disputes over, 189-91; illegal ac- 
tivities along, 170, 192; military con- 
trol of, 156, 193 

Boves, Jose Tomas, 10 

BR. See Red Flag 

Brady, Nicolas, 129 

Brady Plan, 129-30 

Brazil: imports from, 124; interest of, in 
Essequibo dispute, 190-91; relations 
with, 191-92 

Brazo Casiquiare, 46 

Britain: imports from, 124; investment 
by, 128 

broadcasting, 166 

budget deficit, 36 

Budget Office, 85 

bureaucracy, 142; corruption in, xxv, 
142, 148, 149; development of, 13, 15; 
expansion of, 83, 142; labor force in, 
87; political role of, 158-59; problems 
caused by, xxi; reform of, 148, 158; 
scandals in, 158 

Burelli Rivas, Miguel Angel, 29 

Burnham, Forbes, 191 

business: associations, 165; newspapers 
of, 166 

bus services, 121 



cacao {see also cocoa): cultivation of, 94 
CADAFE. See National Electricity 
Company 

Caldera administration, 29, 149; foreign 
policy under, 169; pacification program 
of, 30; reform under, xxii, 29, 148 

Caldera Rodriguez, Rafael, 16, 19, 136, 
162; in 1952 elections, 21; in 1958 elec- 
tions, 23; in 1968 elections, 29; 
popularity of, xxvii 

Calderon Berti, Humberto, 37 

Cali Cartel, xxiv 

Camara Venezolana de la Industria de 
Radiodifusion. See Venezuelan Cham- 
ber of the Broadcasting Industry 

Cametro. See Caracas Metro 

Canada: exports to, 126; imports from, 
124; trade with, 100 

Canary Islanders, 7 

CANTV. See Compama Nacional de 
Telefonos de Venezuela 

capital: account, 128; accumulation, 24; 
investment, 85; markets, 118; outflow, 
36, 127, 128, 129 

Caprile family, 166 

Capuchin missionaries, 6, 69 

Caquetfo people, 48 

Carabobo: petrochemical complex in, 
103; protests in, xxiv 

Carabobo University, 74 

Caracas, 45; AIDS in, 75; barrios of, 
56-58; bombed by Venezuelan air 
force, 22-23; development of, 13; 
growth of, 8, 13, 56; illegal immigrants 
in, 55; importance of, 136, 166; 
manufacturing in, 112; migration to, 
51, 55; military region, 197; news- 
papers in, 166; percentage of popula- 
tion living in, 52; population of, 41, 53; 
protests in, xxiv, 159; rainfall in, 46; 
ranchos in, 26; schools in, 71 

Caracas cabildo, 9 

Caracas Chamber of Industry, 160 
Caracas Company, 3, 7-8; disputes of, 

with cocoa growers, 8 
Caracas junta, 9 

Caracas Metro (Cametro), 56, 121 

Caracas Province, 6 

Caracas Stock Exchange {see also stock 

market), 118 
Carbones de Zulia (Carbozulia), 110 
Carbozulia. See Carbones de Zulia 
Caribbean: financial aid to, 30, 31; 



257 



Venezuela: A Country Study 



imports from, xxv; oil exports to, 101 , 
172; slave labor in, 5 

Caribbean Basin: influence in, 184; 
regional power in, 183, 184 

Caribbean Community and Common 
Market (Caricom), xxviii 

Caribbean Development Bank, 30, 130 

Caribbean Sea, 190, 191 

Caricom. See Caribbean Community and 
Common Market 

Caruachi hydroelectric complex, 104 

Castro, Cipriano, 14 

Castro administration (1899-1908), 14; 
military innovations under, 178 

Castro Ruz, Fidel, 25, 169, 185; disin- 
tegration of regime of, xxiii; efforts of, 
to export revolution, 28, 187; as threat, 
186 

Catholic Church. See Roman Catholic 
Church 

Caucasians: as percentage of population, 
63 

caudillismo, 3, 135-36, 177; end of, 179; 
militia system in, 178; political system 
in, 41 

caudillos, 41, 139; personal armies of, 178 
CAVIM. See Venezuelan Military Indus- 
tries Company 
Central America: financial aid to, 30, 31; 
oil exports to, 101; political support for, 
172 

Central American Bank for Integration, 
131 

Central Bank of Venezuela (BCV), 
36-37, 85, 99; interest rate policies of, 
117; modernization under, 115-116; 
privatization of, 117 

Central Office of Coordination and Plan- 
ning (Cordiplan), 83; creation of, 148; 
goals of, 148, 153, 158; minister of, 
142; modernization under, 115-16; re- 
form under, 149; responsibilities of, 85 

Central Office of Personnel, 148 

Central University of Venezuela, 16, 74; 
closed by Perez administration, 21; 
leftist activities in, 28, 161, 162 

Chamber of Deputies {see also Congress), 
18, 143, 154, 163; seat distribution sys- 
tem in, 152; women in, 67 

Chamber of the Petroleum Industry, 160 

Chamorro, Violeta Barrios de, 170 

Champlin, 101 

charitable organizations, 77 



Charles IV, 9 

Chavez Frias, Hugo, xxv, xxvi 
children: abandonment of, 62; day care 

for, 67; support of, 58 
Chile: economic policies, 127; trade 

agreements with, xxviii; training of 

Venezuelan army by, 14 
chocolate, 7 
cigarette industry, 94 
Circulo de las Fuerzas Armadas. See 

Officers Club 
Citgo, 101, 130 

Ciudad Bolivar: military region, 197; pro- 
tests in, xxiv 

Ciudad Guayana, 191; concentration of 
population in, 52; creation of, 56; in- 
dustrial development in, 33-34, 97; 
manufacturing in, 112; population of, 
34 

civil liberties, 25 

civil servants: professionalization of, 

148-49; training for, 148 
civil war, 9 

class system {see also under individual class- 
es): effect of independence on, 41-42; 
effect of oil on, 41-42 

climate, 45-46; rainy season, 45-46; tem- 
perature zones, 46 

coal: deposits, 110; export of, 81; mar- 
kets for, 110; production, 110 

coal industry, 36 

cocaine: exports, xxiv; transshipment of, 
203, 206 

cocoa {see also cacao), 94; boom, 3; un- 
der encomienda system, 82; export of, 
125; growers, 8, 41; impact of, 7, 82; 
as principal export, 3, 7, 12; produc- 
tion, 41; rebellion (1749), 8 

coffee, 94; boom, 15, 82; exports, 94, 125; 
growers, 41; impact of, on society, 50, 
82; as principal export, 3, 12, 50; 
production, 13, 41 

Coffee Stabilization Fund, 130 

Colombia {see also New Granada): border 
with, 66, 125, 147; border disputes 
with, 188; in Contadora Group, 170, 
184-85; drug trafficking in, 203; eco- 
nomic cooperation with, xxv; guerril- 
la strikes from, 189; illegal immigrants 
from, 54, 170; imports from, 125; in- 
ternal security problems of, 188; 
meeting of presidents of, 169, 70; rela- 
tions with, 169-70, 187-89; security 



258 



Index 



cooperation with, 188; territory dis- 
putes with, 169, 188 

Colombian-Caribbean Highway, 121 

colonial rule, 6-8; administration, 6; 
agriculture under, 6-7; army under, 
177; militia system under, 177-78; 
provinces under, 6 

colonial society: hierarchy in, 7; impact 
of cocoa on, 7 

Columbus, Christopher, 3; explorations 
of, 4 

Comite de Organization Polftica Electoral 
Independiente (COPEI). See Social 
Christian Party 

Command and Staff School, 201 

commerce: financing for, 117; labor force 
in, 87; lobby, 160 

Commission on Public Administration, 
148; reform plan of, 148 

Committee of Autonomous Unions, 161 

communications (see also telecommunica- 
tions): infrastructure development, 13 

Communication Satellite Corporation 
(COMSAT), 123 

communism: containment of, 186; threat 
of expansion of, 187 

communists (see also Venezuelan Com- 
munist Party), 20 

Compania Anonima de Administration 
y Fomento Electrico (CADAFE). See 
National Electricity Company 

Compania Anonima Metro de Caracas 
(Cametro). See Caracas Metro 

Compania Anonima Venezolana de 
Industrias Militares (CAVIM). See 
Venezuelan Military Industries Com- 
pany 

Compania Nacional de Telefonos de 
Venezuela (CANTV), 122-23 

COMSAT. See Communication Satellite 
Corporation 

CONDOR. See Andean Satellite Corpo- 
ration 

Confederation de Trabajadores de 
Venezuela (CTV). See Confederation of 
Venezuelan Workers 

Confederation of Venezuelan Workers 
(CTV), xxvii, 36, 87, 160 

Congress (see also under individual houses), 
18, 118; appointment of judges by, 147; 
apportionment of seats in, 19; authority 
of, 144; committees in, 144; immuni- 
ty in, 144; legislation in, 144-45; or- 



ganization of, 144; political significance 
of, 144 

Congress at Angostura (1819), 10 
conquest, 5 

conscription, 194, 195; deferment from, 
194; registration for, 194 

conscripts, 194; women as, 194-95 

Consejo Supremo Electoral (CSE). See 
Supreme Electoral Council 

Consejo Venezolano para los Ninos 
(CVN). See Venezuelan Children's 
Council 

Consensus of Lima (1973), 30 

Conservatives, 12 

Constituent Assembly, 20 

constitution: changes of, 139; of 181 1 , 9; 
of 1830, 12; of 1952, 21; of 1857, 13; 
of 1936, 17, 21; of 1947, 20, 21, 151; 
of 1952, 21 

constitution of 1961, 136; civil liberties 
under, 25, 137, 139, 141; civil obliga- 
tions under, 140; elections under, 138; 
legislature under, 25; local government 
under, 149-50; president under, 25, 
138; religious freedom under, 68; re- 
visions of, 140; social justice goals of, 60 

Constitution of the Republic of Gran 
Colombia, 1 1 

construction industry, 114; government 
role in, 114; illegal immigrants work- 
ing in, 55; labor force in, 114; as per- 
centage of gross domestic product, 114; 
state-owned enterprises in, 114 

Contadora Group, 170, 172, 184-85 

Contadora process, 185-86; goals of, 185; 
problems in, 185-86 

contraceptives, 52 

COPEI. See Social Christian Party 

Cordiplan. See Central Office of Coordi- 
nation and Planning 

Coro: slave trade in, 5 

Corporacion Venezolana de Fomento 
(CVF). See Venezuelan Development 
Corporation 

Corporacion Venezolana de Guayana 
(CVG). See Venezuelan Corporation of 
Guayana 

Corporacion Venezolana de Petroleos 
(CVP). See Venezuelan Petroleum Cor- 
poration 

Corpoven, 99 

Correo Nacional, 165 

corruption, 35, 38, 77, 81, 136; under 



259 



Venezuela: A Country Study 



Gomez, 179; of judges, 206; under Pe- 
rez, xxv, xxvii; under Perez Jimenez, 
68, 82, 128; in petroleum industry, 102; 
in prisons, 211 
Costa Rica, 185 

cotton: under encomienda system, 82; as ex- 
port crop, 50 

Council of Ministers, 142 

coups d'etat, 155; of 1945, 18-19, 160, 
180; of 1948, 20, 68, 181 ; of 1980, 14 

coups d'etat, attempted, 136, 156; against 
Betancourt, 182; against Perez, xxii- 
xxiii, xxv; possibility of, xxvi, 28 

credit cards, 117 

Crespo, Joaquin, 14 

Crespo administration (1892-98), 14 

criminal justice system, 209-10; extradi- 
tion in, 210; influences on, 209; 
offenses, 210; penalties, 210; problems 
in, 209; public defenders program, 209 

criollos, 7, 49; in independence move- 
ment, 49, 139; social status of, 64 

CSE. See Supreme Electoral Council 

CTV. See Confederation of Venezuelan 
Workers 

Cuba, xxiii; expelled from Organization 
of American States, 26; exports to, 126; 
influence on, 184; relations with, xxv, 
26, 28, 169; as threat, 186, 192 

Cuban Revolution, 25-26 

Cumanagoto people, 48 

Cumana Province, 6 

currency: devaluation, xxiii, 84, 86, 126, 
155; fluctuation of, xxviii 

Currency Exchange Office (Recadi): 
scandals in, 86 

current account: deficit, 127; merchandise 
trade in, 127; services in, 127; trans- 
fers in, 127 

customs: military responsibilities in, 193 

Cuyuni River, 190 

CVF. See Venezuelan Development Cor- 
poration 

CVG. See Venezuelan Corporation of 
Guayana 

CVN. See Venezuelan Children's Council 
CVP. See Venezuelan Petroleum Corpo- 
ration 



Daily Journal, 166 
death penalty, 210 



Declaration of Principles and Governing 
Program, 24 

defense budget: as percentage of govern- 
ment budget, 196; stability of, 196; un- 
der trienio, 180 

defense spending, 195-96; control over, 
195; limitations on, 195-96; as percent- 
age of gross domestic product, 196; 
tightening of, xxv 

Delgado Chalbaud, Carlos, 19, 180; as- 
sassinated, 21, 181; military junta un- 
der, 20-21, 181 

Delta Amacuro territory, 137 

democracy: commitment to, 154, 168, 
173, 177; established, xxi, 135; threats 
to, 136; transition to, 135 

Democratic Action (AD), xxii, 25, 87, 
163, 164; agrarian reform under, 
164-65; co-optation of military by, 156; 
coup by, 18-19, 160; in elections, 21, 

23, 28, 31, 35, 37, 150-51, 152, 154; 
foreign relations under, 172; formed, 
18, 162; interparty cooperation of, 24; 
leaders exiled, 21; outlawed, 21; 
peasant leagues of, 61, 162, 164-65; 
platform of, 20; relations of, with 
church, 68; role of middle class in, 162; 
social justice goals of, 60, 153, 155, 180; 
in trienio junta, 19, 180; underground 
activities of, 21 

"Democratic Caesarism," 14-15, 22 
Democratic National Bloc (BDN), 162 
Democratic Republican Union (URD), 
20, 25, 162; interparty cooperation of, 

24, 28; leaders exiled, 21; in 1952 elec- 
tions, 21; in 1958 elections, 23; in 1968 
elections, 29; in 1973 elections, 30, 31 

Deposit Insurance Corporation, 116 
diamonds, 110, 111 
Diario 2001, 166 
Diego de Losada, 6 
diet, 75 

Direction de Seguridad e Inteligencia 
Policial (Disip). See Directorate of In- 
telligence and Prevention Services 

Directorate of Frontiers, 193 

Directorate of Intelligence and Prevention 
Services (Disip), 208 

Disip. See Directorate of Intelligence and 
Prevention Services 

districts, 150 

doctors, 75 

Dominican missionaries, 69 



260 



Index 



Dominican Republic: political support 
for, 172 

drug trafficking, xxiv, 147, 170, 203; ef- 
forts against, 194; role of Venezuela in, 
206 



earthquake of 1812, 9 

Eastern Europe: relations with, 29 

Eastern University, 74 

economic development, 72; business par- 
ticipation in policy making for, 160; 
government commitment to, 153, 173; 
under Medina, 18; promotion of, 186 

economic growth: under Leoni, 28; im- 
pact of, 66; and new home starts, 114 

economic infrastructure, 12; program for 
developing, 17-18 

economic institutions, 81 

economic modernization, 17 

economic policies, 82, 84-86; exchange- 
rate policy, 86; fiscal policy, 84-85; 
monetary policy, 85-86; of Perez, xxvi 

economic reform, 92 

economy: agricultural, 177; under Betan- 
court, 27; under Lusinchi, 84; politi- 
cal cooperation in, 24; role of, in 
foreign policy, 155; role of bureaucra- 
cy in, 158; role of petroleum in, 97 

Ecuador, 11; economic policies, 127; im- 
ports from, 125 

education {see also schools), 70-74; abroad, 
74; adult, 74; basic, 74; under Caldera, 
29; compulsory, 70; in elite class, 59; 
free, 70, 71; government programs in, 
153; under Guzman, 13; impact of, 67; 
influences on, 70, 72; in middle class, 
60; natural science in, 72; under Perez, 
22; under Perez Jimenez, 71; pre- 
school, 72; private, 20; reforms, 155; 
role of church in, 69, 70, 71, 156; so- 
cial sciences in, 72; system, 74; tech- 
nical, 74; vocational, 72 

education, public, 15; desire for, 70; es- 
tablished, 71; government regulation 
of, 20 

Eisenhower, Dwight D., 22 
El Callao gold mine, 110 
El Cerro Bolivar iron mine, 108 
El Diario de Caracas, 166 
elections, local: abstentions in, 152-53; 
of council members, 150; frequency of, 



151; of governors, 137, 150, 151; of 
mayors, 151; of 1948; of 1989, 150-51 
elections, national, 151-52; constitutional 
provisions for, 138; frequency of, 151; 
legitimacy of, 152; of 1947, 20, 180; of 
1952, 21, 181; of 1957, 22; of 1958, 23, 
182; of 1963, 26, 27; of 1968, 28-29; 
of 1973, 30-31; of 1978, 35; of 1983, 
37; of 1988, 152; outcomes of, 154; 
quotient system in, 152; regulation of, 
138 

electoral system, 151-53; ballots in, 151; 
participation in, 151; registration in, 
151 

electricity (see also under hydroelectric): ca- 
pacity, 103-4; consumption, 103-4; 
generation, 103, 143, 169; thermal, 103 

elite class, 58-59, 177; composition of, 41, 
58-59; education in, 59, 72; ethnic 
makeup of, 59; mores of, 59; permea- 
bility of, 59; professions of, 59; religion 
of, 59; women in, 59 

El Mundo, 1 66 

El National, 166 

El Salvador, 185 

El Tocuyo: slave trade in, 5 

El Universal, 166 

Emparan, Vicente, 9 

encomienda system, 82 

Escalante, Diogenes, 18 

Echeverria Alvarez, Luis, 31 

Espafia, Jose Maria, 50 

Essequibo region, 189; dispute over, 169, 
190 

Estrada, Pedro, 21 

ethnic groups, 48-50, 63-66; ancestry of, 

49; breakdown of, 63; in elite class, 59; 

in middle class, 59; perceptions of, 49; 

racial mixture among, 63, 64; relations 

among, 49 
Europe: education in, 74; immigrants 

from, 53; iron exported to, 110; foreign 

investment under, 171-72; trade with, 

100 

European Economic Community: volun- 
tary restraint agreement with, 108 

exchange-rate: liberalization, 95; manipu- 
lation, 125; policies, 86, 123; system, 
84, 86 

exchange rates, multiple, 124 
executive, 140-43; elections of, 140-41; 

qualifications for, 140; stability of, 154 
exporters: tax rebates for, 126 



261 



Venezuela: A Country Study 



exports, 125-26; agricultural, 3, 7, 12, 15, 
41, 50, 94; agriculture as percentage of, 
89; of gold, 111; income from, 77; of 
iron, 110; leather, 7; nontraditional, 
125; petroleum, 97, 101; traditional, 
50, 125; to the United States, 126 

Extended Fund Facility, 131 

Exxon, 98 



FAC. See Armed Forces of Cooperation 
Falcon, Juan C: as president, 13 
Falcon state, 48 

Falklands/Malvinas conflict, 171 

FALN. See Armed Forces of National 
Liberation 

FAN. See National Armed Forces 

farming. See agriculture 

Federacion de Camaras y Asociaciones de 
Comercio y Produccion (Fedecamaras). 
See Federation of Chambers and Associ- 
ations of Commerce and Production 

Federacion Estudiantil de Venezuela 
(FEV). See Venezuelan Student Fed- 
eration 

federalism, 13, 139, 140 

Federal Republic of Germany, 124; ex- 
ports to, 126; investment by, 128 

Federal War (1858-63), 13, 50 

Federation of Chambers and Associations 
of Commerce and Production (Fede- 
camaras), 88, 160 

FEI. See Independent Electoral Front 

feminist movement, 67 

Ferdinand VII, 9, 10, 11 

Fernandez, Lorenzo, 31 

Ferrominera, 108 

FEV. See Venezuelan Student Federation 
Fiat, 112 

financial aid: oil money used for, 30, 31 ; 
oil subsidies as, 184; from United 
States, 130 

financial infrastructure, 115 

financial restructuring, 116 

financial sector: components of, 115; re- 
form of, 85 

First Republic, 9 

fiscal accounts, 84-85 

fishing, 96-97 

FIV. See Venezuelan Investment Fund 
FND. See National Democratic Front 
Fondo de Inversiones de Venezuela 



(FIV). See Venezuelan Investment 
Fund 

Fondo Nacional de Investigaciones 
Agropecuarios. See National Agricultur- 
al and Livestock Research Fund 

food: imports, 92, 155; subsidies for, 25 

food riots, 77, 84, 90, 123, 136-37, 154, 
159, 206-7; casualties in, 62, 207; 
causes of, 130, 206-7 

Ford, 112 

Foreign Commerce Institute, 142 

foreign debt, 38, 77, 128-30, 158; at- 
tempts to pay, 37, 99; debt-for-equity 
program, 130; interest payments on, 
85; management efforts, 129; pay- 
ments, 129; private, 129; public-sector, 
35, 37; reduction, 129; rescheduling 
agreements, 129; size of, 36; from Unit- 
ed States, 171 

foreign exchange: authority, 85; generat- 
ed by mining industry, 105; generated 
by steel industry, 108; system, 37 

foreign investment, 111, 171-72 

foreign loans, 13, 34-35, 36 

foreign policy, 29-30; presidential 
authority over, 141 ; role of economy in, 
155 

foreign relations, 29, 167-73; economic 
relations, 124-32; under Perez, xxv; 
principles of, 167 

foreign trade, 124-27; contraband, 125; 
deficit, 124; policy, 126 

Foreign Trade Institute, 126 

forestry, 97, 131 

forests, 92 

Formula One, 163 

France: imports from, 124; influence of, 
on education system, 72; military train- 
ing in, 179 

Franciscan missionaries, 6 

Frente Electoral Independiente (FEI). See 
Independent Electoral Front 

Frente Nacional Democratica (FND). See 
National Democratic Front 

Frente Sandinista de Liberacion Na- 
cional. (FSLN). See Sandinista National 
Liberation Front 

FSLN. See Sandinista National Liberation 
Front 

Fuerzas Armadas de Cooperation (FAC). 

See Armed Forces of Cooperation 
Fuerzas Armadas de Liberacion Nacional 



262 



Index 



(FALN). See Armed Forces of Nation- 
al Liberation 
Fuerzas Armadas Nacionales (FAN). See 
National Armed Forces 



Gaceta de Caracas, 165 

Gallegos, Romulo, 162, 180; exiled, 20, 

163; as president, 20, 163 
gas, natural, xxii, 101-2; pipeline, 102; 

production, 36 
GATT. See General Agreement on Tariffs 

and Trade 
Gaviria, Cesar, 170 
GDP. See gross domestic product 
General Agreement on Tariffs and Trade 

(GATT): adherence to, 126 
Generalized System of Trade Preferences, 

32 

General Motors, 112 
Generation of 1928, xxi, 16, 17, 136, 162, 
163 

geography, 42-48, 182; climate, 45-46; 
hydrography, 46-47; regions, 42; 
topography, 42-45 

gold, xxii; exploration for, 5; exports, 
111; foreign interests in, 111; illegal 
mining of, 191-92; production, 1 10- 
11; reserves, 110 

Golfo de Guajira. See Golfo de Venezuela 

Golfo de Venezuela, 169, 188 

Gomez, Juan Vicente, 14, 50-51, 58, 
179; background, 51; death of, 136; ef- 
forts to overthrow, 16 

Gomez dictatorship (1908-35), 14; army 
under, 14, 179; corruption under, 179; 
discovery of oil under, xxi; dissidents 
exiled by, 162; education under, 71; 
secret police under, 14 

government, local, 85, 137, 149-51; elec- 
tions, 150; structure, 149 

government, national: division of powers 
in, 139; economic development by, 
140; goals of, 142; relations of, with 
church, 68; spending, 85 

government, state: administrative struc- 
ture of, 137-38; governors of, 137; 
legislative assemblies of, 137 

governors: election of, 139, 142, 150 

Graduate Institute of Public Administra- 
tion (IESA), 148 

Gran Colombia, 11, 135; division of, 12 



Gran Sabana, 45 

Grenada: United States intervention in, 
184 

gross domestic product (GDP): agricul- 
ture as percentage of, 89; construction 
as percentage of, 114; decline in, 36; 
financial aid as percentage of, 131; 
government spending as percentage of, 
85; growth of, xxiii, xxviii; military 
spending as percentage of, 196; in 
1980s, 81; in 1990s, xxiv, xxviii; oil- 
related, xxiii-xxiv, 97 

Guajiro people, 48, 49; culture of, 49, 66; 
religion of, 68 

Gual, Manuel, 50 

Guarico State, 92, 93 

Guasina Island concentration camp, 21 

Guatemala, 185; oil exploration in, 100 

Guayana Province, 6 

guerrilla warfare, 26, 170 

Guevara, Ernesto "Che," 30 

Guiana highlands, 45, 97 

Guri Dam, 103, 169 

Guyana: oil exploration in, 100; relations 
with, 169, 189-91; territory disputes 
with, 169, 189-91 

Guzman Blanco, Antonio, 13 

Guzman administration (1870-88): cor- 
ruption in, 13; established, 13; public 
education established under, 71 



hacendados, 41 
Haiti, xxv 

health (see also population statistics), 
74-76; causes of death, 75; diet, 75; en- 
demic diseases, 75; government pro- 
grams in, 153; military responsibilities 
in, 193-194; public, 75, 76; reforms, 
155 

health care, 16; availability of, 75-76; fa- 
cilities, 75, 76, 77; under Perez, 22; 
personnel, 75; subsidies for, 25 

Herrera administration, 35-37; austeri- 
ty measures under, 36-37; foreign af- 
fairs under, 188; spending under, 
83-84 

Herrera Campins, Luis, 35, 167, 170 
Herring, Hubert, 21 
Honduras, 185 
House of Welser, 5 

housing (see also ranchos): subsidies for, 25 



263 



Venezuela: A Country Study 



Hydrocarbons Reversion Law (1971), 29, 
101 

hydroelectric generation, xxii, 48, 103; 

expansion of, 104; potential, 103 
hydroelectric industry, 33, 83 
Hypothesis of Caraballeda, 188 



IDB. See Inter- American Development 
Bank, 31 

IESA. See Graduate Institute of Public 
Administration 

IMF. See International Monetary Fund 

immigration, 54-55; from Africa, 54; 
from Argentina, 54; from Chile, 54; 
from Colombia, 54, 169; from Europe, 
53, 54, 160; illegal, 55, 169, 189; from 
the Middle East, 54; military respon- 
sibilities in, 193; from Spain, 49, 53, 
54; from Uruguay, 54; of workers, 54, 
55; after World War II, 53-54 

import: liberalization, 125; licensing re- 
strictions, 125; policy, 125; protection, 
84 

imports, 126; of food, 51, 92; impact of 
oil on, 124; increase in, 15, 51; total, 
124 

INA. See National Agrarian Institute 

income: of blue-collar laborers, 87; dis- 
tribution, 33, 87, 118; during oil boom, 
xxi; per capita, 136; tax laws, 18; of 
white-collar laborers, 87 

independence, 3; declared, 9, 135; effect 
of, 41-42, 82 

independence, war of: battles in, 8, 9, 10, 
11; legacy of, 138-39; militias in, 178 

independence movement: blacks in, 50; 
criollos in, 49; effects of, 12; influences 
on, 70; pardos in, 50 

Independent Electoral Front (FEI): 
formed, 21 

Independent Moral Movement, 164 

Independent Venezuelan Association, 160 

Indian Commission, 69 

Indians {see also under individual peoples), 49; 
in colonial hierarchy, 7; conversion of, 
to Christianity, 69; cultures of, 63; de- 
struction of, 63; education of, 69; 
geographical distribution of, 48; as per- 
centage of population, 7, 63; popula- 
tion of, 48; religion of, 66, 67-68, 70; 
social structure among, 61; tribute 
from, 50 



indigo: under encomienda system, 82 

indocumentados, 55, 169; number of, 189 

Industrial Bank of Venezuela (BIV), 1 16 

industrial development: autonomous en- 
tities under, 33; under Caldera, 29; in 
Ciudad Guayana, 33-34; government 
programs in, 153; under Perez, 33; oil 
profits used for, 51; semiautonomous 
entities under, 33 

industrial infrastructure, 33 

industrialization, 67 

Industria Venezolana de Aluminio C.A. 
(Venalum), 106 

industry (see also under individual industries): 
credit subsidies for, 126; electricity con- 
sumed by, 103-4; expansion of, 82; 
financing for, 117; geographical distri- 
bution of, 45; lobby, 160; local, 24; 
subsidies for, 24 

Infanteria de Marina. See Marine Infantry 

inflation, 86; attempts to decrease, xxiii; 
under Herrera, 36; increases in, 15, 
155; in 1980s, 88 

infrastructure development, 13, 82; un- 
der Leoni, 28; under Perez, 131 

INP. See National Port Institute 

Instituto de Estudios Superiores de Ad- 
ministration (IESA). See Graduate In- 
stitute of Public Administration 

Instituto National Agrario (INA). See Na- 
tional Agrarian Institute 

Instituto National de Puertos (INP). See 
National Port Institute 

Instituto Postal Telegrafico (Ipostel). See 
Postal and Telegraph Institute 

Instituto Venezolano de Petroqufmicas 
(I VP). See Venezuelan Petrochemical 
Institute 

Instituto Venezolano de Seguro Social 
(IVSS). See Venezuelan Social Securi- 
ty Institute 

Interamericana de Alumina (Interalumi- 
na), 105-6; production, 106 

Inter-American Development Bank 
(IDB), 31, 131 

interest groups, 155-62; armed forces as, 
155-56 

interest rates, 85-86; liberalized, 118; 

policies, 116, 117; subsidized, 118 
International Monetary Fund (IMF); 

loans from, 84, 128, 131 
investment: foreign, 127, 128; private, 

125 



264 



Index 



Ipostel. Postal and Telegraph Institute 
iron: export of, 81, 110; industry, xxii, 

106, 112; mines, 34; production, 

108-10; reserves, 108 
irrigation, 92-93, 96 
Italian News Agency (ANSA), 166 
Italy: coal exported to, 110; imports from, 

124 

I VP. See Venezuelan Petrochemical In- 
stitute 

IVSS. See Venezuelan Social Security In- 
stitute 



Jamaica, 10 

Japan: exports to, 126; iron exported to, 
110 

Japanese Export-Import Bank, 128 
Jews, 67 

Joint General Staff, 197 

judges, 147; corrupt, 206; powers of, 147; 
salaries of, 147; selection of, 147; short- 
age of, 209; system of appointing, 209 

Judicial Council, 209 

judiciary, 145-47; court structure, 146- 
47 \fuero militar (military privilege), 147; 
judicial districts, 146; military tri- 
bunals, 147; organization of, 145; sta- 
tus of, 145 

junta of 1958, 23 

Kobe Steel Company, 108 

labor: government support for, 24; laws, 
87; movement, 136; relations, 88 

labor force, 86-89; in agriculture, 87, 89; 
in commerce, 87; in construction, 114; 
formal sector, 86-88; in the govern- 
ment, 87; informal sector, 89; in 
manufacturing, 87, 111, 112; in min- 
ing, 87; number of workers in, 86, 89; 
as percentage of population, 87; in the 
petroleum industry, 87; rights of work- 
ers in, 87; in service industry, 87; wom- 
en in, 42, 87 

labor unions, 87-88; harassed by Perez 
administration, 21; influence of politi- 
cal parties on, xxii; newspapers of, 166; 
number of workers in, 87; organization 
of, 17; oudawed, 17; as political interest 
group, 160, 165; protests by, xxiv; Ro- 



man Catholic, 161; teachers', 71 
La Critica, 166 

LAFTA. See Latin American Free Trade 

Association 
Lago de Maracaibo, 3, 4, 42, 48 
Lagoven, 98 

La Guaira, 6; AIDS in, 75; port, 122 

land concentration, 91 

land reform {see also agrarian reform), 27, 

83; benefits of, 91; failure rate in, 91; 

under junta of 1958, 20, 91 
land tenure, 91 
land use, 91-92 

La Patria Boba. See First Republic 
Lara state, 48 
La Religion, 165 

Larrazabal, Wolfgang, 23, 29, 181-82 
Latin American Economic System 

(SELA), 31-32, 126 
Latin American Free Trade Association 

(LAFTA), 126 
Latin American Integration Association, 

168 

LAV. See Venezuelan Airmail Line 
law enforcement agencies, 208-9 
Law of Unjustified Dismissals (1974), 32 
Law on Immigration and Settlement 

(1936), 53-54 
leather: export of, 7 
Legion of Merit, 22 
legislation, 144-45; initiation of, 144; 

cooperation in producing, 154 
legislature, 143-45; elections, 143, 145; 

under 1961 constitution, 25, 143; party 

caucus in, 143 
Leon, Juan Francisco de, 8 
Leoni administration, 28, 182; cabinet in, 

142; foreign policy under, 168-69 
Leoni, Raul, 16, 27, 136, 167; attempt- 
ed coup against, 156 
Levine, Daniel H., 26 
Liberals, 12, 13 
Lieu wen, Edwin, 14 
Lfnea Aeropostal Venezolana (LAV). See 

Venezuelan Airmail Line 
Lionza, Maria: cult of, 69-70 
literacy: programs, 194; rate, xxi, 72, 155 
livestock industries, 95; beef, 95; catde, 

41, 81, 95; pork, 92, 95; poultry, 92, 

95; subsidies, 95 
llaneros: in independence movement, 10; 

under Second Republic, 10 
Llovera Paez, Luis Felipe, 21 



265 



Venezuela: A Country Study 



Lopez administration (1935-41): econom- 
ic modernization under, 17; political 
expression under, 17 

Lopez Contreras, Eleazar, 17, 179 

lower class, xxv, 62; church assistance to, 
62; composition of, 41, 62; education 
for, 72 

lumber industry, 33 

Lusinchi, Jaime, xxviii, 37 

Lusinchi administration, 84; agriculture 
under, 89-90; austerity measures un- 
der, 155; foreign debt under, 155 

Macagua hydroelectric generation plants, 
104 

Machado, Gustavo, 136 
Madrid Hurtado, Miguel de la, 185 
Maiquetia International Airport, 122 
manufacturing, 111-14; categories of, 
112; domestic, 111; expansion of, 111; 
export of products, 113; inefficiency in, 
111; labor force in, 87, 111, 112; na- 
tionalization of, 111; as percentage of 
gross domestic product, 111; structure 
of, 112 

Maracaibo: AIDS in, 75; Guajiro people 
in, 66; illegal immigrants in, 55; migra- 
tion to, 51; military region, 197; 
newspapers in, 166; population of, 53; 
port, 122; schools in, 74 

Maracaibo Basin, 6 

Maracaibo lowlands, 42; oil reserves in, 
100; percentage of population living in, 
52 

Maraven, 99 

March Resources Limited, 111 
Marine Infantry, 182 
marketing boards, 94 
Martial Court, 210 

MAS. See Movement Toward Socialism 
mass media, 165-67; news agencies, 166; 
newspapers, 67, 165-66; shut down by 
Perez, 21, 181; as source of informa- 
tion, 167 

materiel: domestic production of, 196; im- 
portation of, 196; oil revenues for, 179; 
procurement of, 179 

mayors, 151 

Medina administration, 18 

Medina Agarita, Isaias, 18, 162, 179; 

overthrown, 18-19 
Meneven, 99 



MEP. See People's Electoral Movement 
Merida de Maracaibo Province, 6 
Merida state, 48; migration from, 53; 

schools in, 74 
Meridiano, 1 66 

mestizos, 48, 49; as percentage of popu- 
lation, 63; social status of, 64 
Metalmeg steel plant, 108 
Metropolitan Police Force of Caracas, 209 
Metropolitan Urban Commission, 55 
Mexican Revolution (1910), 16 
Mexico: in Contadora Group, 170, 
184-85; in San Jose Accord, 184; un- 
der Spanish rule, 5 
middle class, 59-61; beginning of, 15; 
composition of, 41, 59-60; education 
in, 60, 72; ethnic makeup of, 59-60; 
permeability of, 60; political activities 
of, xxvii, 60, 161-62; professions of, 60; 
social background of, 59-60; and social 
justice ethic, 60-61; women in, 59, 60, 
67 

Midwestern University, 74 

military: capabilities, 192; doctrine, 192; 
manpower, 194-95; problems, 192; 
security posture, 184; training, of for- 
eign troops, 179; tribunals, 210 

Military Academy: enrollment in, 180; 
established, 179 

Military Aviation School, 201 

military personnel: benefits, 195; pay, 
195; retirement, 195 

militia system, 177-78, 179 

Minas Carbon, 110 

mining industry, 83, 104-11, 131; 
government role in, 104; labor force in, 
87; profits, 105 

ministers, 141-42 

Ministry of Agriculture and Livestock, 
90, 96 

Ministry of Education: social justice goals 
of, 60 

Ministry of Energy and Mines, 103 
Ministry of Finance, 85, 130 
Ministry of Foreign Affairs, 193 
Ministry of Health and Social Welfare, 

76; social justice goals of, 60 
Ministry of Interior, 208 
Ministry of Justice, 208, 210; church's 

operating expenses paid by, 68; courts 

of special jurisdiction under, 146-47; 

Indian Commission of, 69 
Ministry of Labor, 87 



266 



Index 



Ministry of National Defense, 193, 196; 

Superior Board of, 197 
Ministry of Public Education, 71 
Ministry of Transport and Communica- 
tions, 123, 166 
Ministry of Urban Development, 114 
MIR. See Movement of the Revolution- 
ary Left 

Miranda, Francisco de, xxi, 8, 178; army 
commanded by, 9; background of, 8; 
death of, 9; desire of, for independence, 
8; surrender by, to Monteverde, 9 

missionaries, 6, 69 

Monagas, Jose Gregorio, 12 

Monagas, Jose Tadeo, 12 

Monagas administration (1846-58), 12; 
ousted, 13 

monetary policy, 85-86; revisions of, 85 

Monteverde, Domingo, 9 

mountains, 42-45 

Mount Roraima, 189 

Movement of the Revolutionary Left 
(MIR), 26, 35, 152, 208; congression- 
al representatives arrested, 26; out- 
lawed, 26; students in, 161 

Movement Toward Socialism (MAS), 30, 
31, 35, 152, 154, 163 

Movimiento al Socialismo (MAS). See 
Movement Toward Socialism 

Movimiento de la Izquierda Revolu- 
cionaria (MIR). See Movement of the 
Revolutionary Left 

Movimiento Electoral del Pueblo (MEP). 
See People's Electoral Movement 

municipalities, 149-51 



Naricual coal mine, 110 
National Agrarian Institute (INA), 56, 
91, 158 

National Agricultural and Livestock 

Research Fund, 96 
National Armed Forces (FAN), xxii, 183; 

Laws and Regulations of, 194 
National Democratic Front (FND), 28, 29 
National Democratic Party (PDN), 17, 

162; legalized, 18 
National Drug Commission, 206 
National Electricity Company 

(CADAFE), 103 
National Fishing Enterprise, 97 
National Guard. See Armed Forces of 

Cooperation 



National Housing Institute, 114 
National Institute of Female Orientation, 
210 

National Intelligence Service, 197 
nationalism, 11-12, 64 
nationalization, 3-4, 34, 83, 98, 111, 149, 
106, 153 

National Opinion (Opina), 154, 163 
National Opposition Union (UNO), 131 
National Pedagogic Institute, 71 
National Plan, Fifth, 33, 34 
National Port Institute (INP), 121, 122 
National Savings and Loan Bank 

(Banap), 118 
National Securities Commission, 116 
National Security and Defense Council, 

197 

National Security Police (SN), 21, 181 
National Students Union, 161 
National University of Carabobo, 71 
National University of Zulia, 71 
Naval Academy, 200 
Naval Armament Training Center, 200 
Naval Infantry Training Center, 200 
Naval Police School, 200 
Naval Postgraduate School, 200 
Naval Superior War College, 200 
Naval Training Center, 200 
navy, 192, 199-200; administration of, 
200; aviation, 200; insignia, 202, 203, 
204, 205; materiel, 200; under Perez, 
181; personnel, 199-200; ranks, 202; 
reorganized, 180; training, 200; uni- 
forms, 202 
New Alternative, 164 
New Democratic Generation, 154, 164 
New Granada (see also Colombia), 10, 11, 
188 

New National Ideal doctrine, 22 

newspapers, 165-66; censored, 166; cor- 
ruption exposed by, 166; impact of, 67 

Nicaragua, 170; oil debt canceled, 170; 
relations with, 170-71; United Nations 
peacekeeping mission in, 170 

Nueva Generation Democratica. See New 
Democratic Generation, 154 

nurses, 75 

Nynas, 101 



OAS. See Organization of American 
States 



267 



Venezuela: A Country Study 



Office of Integrated Educational Plan- 
ning, 158 

Office of the President, 83 

officers: cliquishness among, 179-80; 
commissioned, 194; mutual aid fund 
for, 179; noncommissioned, 194; train- 
ing, 199; training abroad, 179 

Officers Club, 181 

Oficina Central de Coordinacion y 
Planiflcacion (Cordiplan). See Central 
Office of Coordination and Planning 

oil {see also petroleum): discovery of, xxi, 
98; diversification from, 126; effect of, 
on class system, 41-42; effect of, on im- 
port patterns, 124; exploration, 17, 51, 
58, 99-100, 136, 172; export of, 81, 82, 
97, 101, 124, 125, 182, 186; and gross 
domestic product, xxiii-xxiv; impact of, 
on military, 177; impact of, on socie- 
ty, 51, 182; income from, 34, 177, 186; 
price of, 4, 36, 77; production of, 81; 
refining, 100, 101, 172; reserves, 81, 
97, 100, 187; strategic importance of, 
187; subsidies, 184 

oil boom, 82; effect of, on economy, 
83-84, 128, 136; effect of, on society, 
xxi 

oil industry, 15, 98, 177; corruption in, 
98; impact of, on society, 53; as mili- 
tary mission, 183; nationalized, 83, 98, 
149; problems in, xxviii; revenues used 
to purchase materiel, 179; taxes on, 20, 
82 

oil workers, 82; strike by, 17 

Ojeda, Alfonso de, 4 

OPEC . See Organization of the Petrole- 
um Exporting Countries 

Opina. See National Opinion 

Opinion Nacional (Opina). See National 
Opinion 

Organic Law of Education (1980), 72 
Organizacion Venezolana (Orve). See 

Venezuelan Organization 
Organization of American States (OAS), 
175; Cuba expelled from, 26; embar- 
go of Haiti under, xxv; membership in, 
167 

Organization of the Petroleum Exporting 
Countries (OPEC), 27; control of ex- 
ports by, 126; membership in, 83, 155, 
167, 172; and price of crude oil, 4 

Organization of the Petroleum Exporting 
Countries Fund, 130 



orimulsion, 100 

Orinoco Asphalt (Bitumenes del Orino- 
co), 100 

Orinoco Delta, 45; agriculture in, 56; oil 

reserves in, 100; rainfall in, 46 
Orinoco plains, 45 

Orinoco Steelworks (Sidor) (see also steel 
industry), 33; debt of, 108; national- 
ized, 106; profit of, 108 

Ortega, Daniel, 170 

Orve (Organizacion Venezolana). See 
Venezuelan Organization 

Pact of Punto Fijo, 24, 23 

Paez, Jose Antonio, 10, 50, 61, 178; na- 
tionalism under, 11-12; as president, 
12, 135 

Paez administration (1830-46), 12 
Panama: in Contadora Group, 170, 

184-85; relations with, 169; slave labor 

in, 5 
Panorama, 1 66 

pardos, 7, 49; in independence movement, 
50, 139 

Partido Comunista Venezolano (PCV). 

See Venezuelan Communist Party 
Partido Democratico Nacional (PDN). See 

National Democratic Party 
Partido Democratico Venezolano (PDV). 

See Venezuelan Democratic Party 
Partido Republicano Progresista (PRP). 

See Progressive Republican Party 
Party of the Venezuelan Revolution, 164 
Patriotic Junta, 161; demonstrations by, 

23; organized, 22 
Patriotic Military Union (UPM), 18-19, 

180 

patronage, 81, 159 
Paz Galarraga, Jesus Angel, 28, 30 
PCV. See Venezuelan Communist Party 
PDN. See National Democratic Party 
PDV. See Venezuelan Democratic Party 
PDVSA. See Venezuelan Petroleum Cor- 
poration 
pearls, 4, 81 

peasant leagues, 61, 164-65 

peasants, 61-62; composition of, 61; po- 
litical activities of, 61; settlement pat- 
terns of, 61; urban migration by, 62 

People's Advance, 164 

People's Electoral Movement (MEP), 28, 
30, 35, 164 



268 



Index 



Peninsula de la Guajira, 188; Guajiro 

people in, 66 
Peninsula de Paria, 4 
peninsulares, 7, 49 

Pequiven. See Venezuelan Petrochemicals 
Perez, Carlos Andres, 30, 31, 76; at- 
tempted assassination of, xxviii; cam- 
paign promises of, 149; election of, 138, 
141 

Perez administration, first (1974-79), 31; 
economic reform under, xxii, 81; em- 
ployment programs under, 32-33; Fifth 
National Plan of, 33, 34; foreign invest- 
ment under, 171-72; oil windfall un- 
der, 31; spending by, 35; subsidies 
under, 32-33; support by, of Sandinis- 
tas, 185 

Perez administration, second (1989- ): 
agriculture under, 90; attempted coup 
of, xxii-xxiii, xxv; austerity measures 
under, 155; corruption in, xxv, xxvii; 
economic reform under, xxii, xxiii, 
xxvi, xxvii, 81, 84, 90; foreign affairs 
under, xxv; foreign investment under, 
171-72; industrial investment under, 
113; measures by, against drug traffick- 
ing, 206; newer industries under, 113; 
protests against, xxvi, 159; reaction of, 
to protests, xxvii, 159; research and de- 
velopment under, 113; social welfare 
under, xxiii; structural adjustments un- 
der, 84, 90 

Perez Alfonso, Juan Pablo, 27 

Perez Jimenez, Marcos, 19, 21; as dicta- 
tor, 21; Independent Electoral Front or- 
ganized by, 21; opposition to, 22-23; 
Patriotic Military Union founded by, 
180; resignation of, 23; United States 
support for, 22 

Perez Jimenez dictatorship, xxi, 181; cor- 
ruption in, 68; education under, 71; 
immigration under, 54, 160; military 
under, xxii, 181; mining under, 106; 
ostentatious construction projects of, 
22; overthrow of, 68, 148, 156, 181; 
protests against, 161; rights repressed 
under, 21, 163; social services ignored 
by, 22 

Peru: battles for liberation from Spain, 
11; imports from, 125; military train- 
ing in, 179; relations with, 169; under 
Spanish rule, 5 

Petkoff, Teodoro, 164 



petrochemicals, xxii, 102-3; complexes, 
102-3; export of, 125; production of, 
102 

Petroleos de Venezuela, S.A. (PDVSA). 
See Venezuelan Petroleum Corporation 

petroleum (see also oil), 97-101; deposits, 
42, 48; discovery of, 6; influence of, on 
politics, 4; influence of, on society, 15; 
as principal export, 3; production, 82; 
products, 100; revenues, 85; role of, in 
economy, 97 

petroleum industry, 81, 83; under Cal- 
dera, 29; control of, 3, 29; corruption 
in, 102; growth of, 16; illegal im- 
migrants working in, 55; labor force in, 
87; lobby, 160; military responsibilities 
in, 193; nationalization of, 3-4, 34, 
153; as percentage of gross domestic 
product, 97; taxes on, 85 

Petroquimicas de Venezuela (Pequiven). 
See Venezuelan Petrochemicals 

Piar, Manuel, 10 

Pinerua Ordaz, Luis, 35 

Polar brewery, 113 

Police Academy, 209 

police forces: local, 208, 209; national, 
208 

Policfa Tecnica y Judicial (PTJ). See Tech- 
nical and Judicial Police 

political parties, 144, 162-64; influence 
of, xxii; legalized, 19; newspapers of, 
166; outreach by, to lower class, 62; 
radical, 203 

political uprisings: anti-Gomez, 16; anti- 
Guzman, 13; anti-Perez, xxvii, 23, 154, 
207; government reaction to, xxvii; 
military responsibilities in, 194 

Polytechnic University of the Armed 
Forces, 199 

Popular Unity, 30, 31 

population, 48-53, 182; age distribution 
of, 53; in Caracas, 41, 45; geographi- 
cal distribution of, 42, 45, 51-52; In- 
dians as percentage of, 7; Indian tribes, 
48; in 1990, 51; in urban areas, 41, 52; 
workers as percentage of, 87 

population statistics: accuracy of, 52; birth 
rate, 52; death rate, 52, 75; density, 41; 
fertility rate, 52; growth rate, 52; in- 
fant mortality rate, 52-53, 75; life ex- 
pectancy, 53, 75, 155; mortality rates, 
52 

port facilities: construction of, 13, 51; oil 



269 



Venezuela: A Country Study 



profits used for, 51 
Portuguesa state, 92, 93 
Postal and Telegraph Institute (Ipostel), 
123 

poverty, xxi, 33 
precious metals, 81 

president (see also executive): armed forces 
under, 196; under constitution of 1961 , 
25, 138, 140-43; former, as senator for 
life, 138, 145; limitations on, 141; 
ministerial responsibility of, 141; pow- 
ers of, 138, 141, 144; terms of office, 
138 

press. See mass media 
price controls, 86 
Prieto, Luis B., 28 

prison: conditions, 210; kinds of, 210; 

population, 210 
prison system, 210-12; conditional liberty 

in, 21 1; military responsibilities in, 193, 

210; problems in, 211 
privatization, 158, 159 
professions: in elite class, 59; in middle 

class, 59-60; of women, 59, 60 
Progressive Republican Party (PRP), 162 
Protection Law for Mortgage Owners 

(1989), 118 
Protestant churches: outreach by, to lower 

class, 62; power of, 67 
Protocol of Port-of-Spain, 190 
Pro- Venezuela, 160 

PRP. See Progressive Republican Party 

PTJ . See Technical and Judicial Police 

public administration, 147-49 

Public Administration Committee, 148 

public policy, 164-65 

public sector: employment in, xxii; 

privatization of, 142-43; production, 

125 

public spending, xxiii 
public works, 13, 15; oil profits used for, 
51 

Puerto Cabello, 122 
Puerto Ordaz, 105, 121-22 

racial: mixture, 63, 64; tension, 77 
Radical Cause, 164 

radio: educational programming on, 71; 
impact of, 67; receivers, number of, 
167 

Radio Caracas Television, 167 
Radio Nacional, 167 



Rafael Urdaneta University, 74 
railroads, 121; construction of, 13, 36 
Ramo Verde School, 202 
Ranchers' and Livestock Association, 160 
ranchos, 26, 30, 56, 114; attempts to gain 

title to, 62; residents of, xxv 
Ran gel, Jose Vicente, 30 
Ravard, Rafael Alfonso, 34, 37 
Reagan, Ronald, 187 
Reagan administration, 187 
Real Compama Guipuzcoana de Caracas. 

See Caracas Company 
Recadi. See Currency Exchange Office 
Red Flag (BR), 208 
Regimen de Cambio de Dinero (Recadi). 

See Currency Exchange Office 
regionalism, 64, 67 

religion (see also under individual sects), 
67-70; freedom of, 68; Indian, 69; role 
of women in, 69; syncretic, 69; tradi- 
tional, 67-68 

Renault, 112 

Republican National Union (UNR), 162 
Reuters, 166 

Revolutionary Action Group, 164 

Ricardos, Felipe, 8 

Rio Apure, 46 

Rio Carom, 48, 103 

Rio Orinoco, 6, 45, 46 

Rio Orinoco Delta: exploration of, 4 

Rfos, Antonio, xxvii 

Rio Unare Basin, 6 

roads, 118-21; construction of, 13, 51, 
131; highway system, 51, 121, 131; 
military responsibilities in, 193; net- 
work size, 121 

Roman Catholic Church: attitudes 
toward, 68; expenses of, paid by 
government, 68; labor organization, 
161 ; outreach by, to lower class, 62; po- 
litical activities of, 24, 156-58; relations 
of, with Democratic Action, 68; rela- 
tions of, with government, 69; role of, 
in education, 20, 69, 70, 71; schools, 
69; television station of, 167; under trie- 
nio, 68; weakness of, 67 

Roman Catholics: adherence of, to tradi- 
tional beliefs, 68, 69; elite as, 59; Indi- 
ans as, 49, 66, 68; political affiliations 
of, 19-20 

Root, Elihu, 14 

Rousseau, Jean-Jacques, 70 

rural areas: defined, 53; health care in, 



270 



Index 



75-76; income in, 87; life in, 61; popu- 
lation in, 53; schools in, 71 
Russian Revolution (1917), 16 

Salesian missionaries, 69 
San Antonio de Tachira meeting, 188 
San Cristobal military region, 197 
Sandinista National Liberation Front 

(FSLN), 131, 170, 185; arms supplied 

to, 185 

San Fernando military region, 197 
San Isidro iron mine, 108 
sanitation, 131 

San Jose Accord, 101, 126, 131, 184 
Santander, Francisco de Paula, 11 
Santiago de Leon de Caracas, 6 
savings and loan associations, 118 
School of the Americas (Fort Benning), 
199 

schools {see also education): enrollments in, 
74; private, 60, 72; public, 71, 72; Ro- 
man Catholic, 69 

Second Republic, 10 

Securidad National (SN). See National 
Security Police 

security, internal, xxiii, 203-8; border 
security problems, 203-6; drug traffick- 
ing, 203; threats to, 203 

security zones, 193 

SELA. See Latin American Economic 
System 

sembrar el petroleo. See sowing the oil 
Senate {see also Congress), 18, 143, 154 
service industry, 81; labor force in, 87; 

lobby, 160 
Shell Oil, 99 
shipbuilding industry, 33 
Siderurgica del Orinoco (Sidor). See 

Orinoco Steelworks 
Sidor. See Orinoco Steelworks 
Simon Bolivar United World Agriculture 

Institute, 96 
Singapore Aerospace Industries, 201 
Sistema Economico Latinoamericano 
(SELA). See Latin American Econom- 
ic System 
Sivensa steel mill, 108 
slave raiding, 4-5 

slavery, 63-64, 82; abolished, 12, 50 
slaves, 49; in colonial hierarchy, 7; de- 
mand for, 7 
slave trade, 7 



SN. See National Security Police 
Social Christian Party (COPEI), xxii, 
149, 163, 164; co-optation of military 
by, 156; in elections, 21, 23, 29, 31, 35, 
151, 152, 154; foreign relations under, 
172; founded, 19-20, 156, 161, 162; in- 
terparty cooperation of, 24; leaders ex- 
iled, 21; role of middle class in, 162; 
role of Roman Catholic Church in, 20, 
68, 69, 156; social justice goals of, 60 
153, 155 

social infrastructure, 12; program for de- 
veloping, 17-18 
Socialist League, 164 
social policies, 82 

social reform, 83; government commit- 
ment to, 153 

social security, 77-78; laws, introduced, 
18; system, 85 

social structure: of barrios, 62; ethnic 
groups in, 66; fluidity of, 66; of Guajiro 
people, 49, 66; Indian, 61, 63; organi- 
zation of, 64 

social welfare, 70-78; under Caldera, 29; 
impact of, 67; organizations, private, 
77; under Perez, xxiii; program, 76; 
role of church in, 156 

society: colonial, 7; impact of coffee on, 
50, 82; impact of oil on, xxi, 15, 51, 
53, 82 

Somoza Debayle, Anastasio, 170, 184 
South America: European exploration of, 
4 

Soviet Union: relations with, 29, 172 
sowing the oil, 27, 82, 111, 121, 128, 153 
Spain: American colonies of, 3; coal ex- 
ported to, 110; conquest of Americas 
by, 63, 81; immigrants from, 49 
Spaniards: social status of, 64 
Spanish language: spoken by Indians, 66 
"Spirit of the 23rd of January," 24, 25 
Staff College, 199 
standard of living, xxi 
state-owned enterprises, 85; creation of, 

158; debt incurred by, 158 
states: autonomy of, 139; dependence of, 

139; powers of, 139, 150 
steamship company, 33 
steel: export of, 81, 125; production of, 
143 

steel industry {see also Orinoco Steel- 
works), xxii, 33, 36, 81, 106, 112; com- 
petition in, 108; exports, 108; investment 



271 



Venezuela: A Country Study 



in, 130; military responsibilities in, 
193; nationalized, 83, 106; production, 
108; subsidies, 108 

stock market {see also Caracas Stock Ex- 
change): fluctuations in, xxviii 

strategic setting, 182-86 

strikes, general: of 1936, 17; of 1957, 23; 
of 1989, 88; of 1992, xxiv 

strikes, labor, 17 

structural adjustment program, 86, 92; 
electricity under, 104; imports under, 
125; public reaction to, 130 

student demonstrations: by Generation of 
1928, 161; anti-Gomez, 16, 136; anti- 
Guzman, 13; anti-Perez, xxiv, xxvii, 
207 

students: leftist, 25-26, 162, 203 
Suarez Flanerich, German, 21, 181 
Suarez Gonzalez, Adolfo, 170 
subsidies, 84; curtailment of, 126; for 
dairy industry, 95; elimination of, xxiii; 
for farmers, 96; for food, 25; for health 
care, 25; for housing, 25; for interest 
rates, 118; for local industry, 24; for 
steel industry, 108 
Sucre, 74 

suffrage (see also voting): universal, in- 
stituted, 19 
Superintendency of Banks, 116 
Superintendency of Foreign Investment, 
130, 142 

Superintendency of Insurance, 116 
Supreme Court of Justice, 144, 145-46, 

210; chambers of, 145; corruption in, 

206; members of, 145 
Supreme Electoral Council (CSE), 151 
Switzerland: investment by, 128 



Tachira state, 14, 15, 16, 48; illegal im- 
migrants in, 55; migration from, 53 
tariffs, 124, 125 
TASS, 166 
teachers, 71, 72 

Technical and Judicial Police (PTJ), 208 
telecommunications, 122-23 
telegraph network: construction of, 13 
telephone company, 122 
television: educational programming on, 

71; impact of, 67; sets, number of, 167; 

stations, 167 
Televisora Nacional, 167 
textile industry, 33 



Third Republic, 10-11; established, 10 

Third World: foreign investment under, 
171-72; outreach to, 186 

timber industry, 97 

Timoto-Cuica people, 5, 48 

tobacco: as cash crop, 94; under encomienda 
system, 82; as export crop, 50, 94 

Tocoma hydroelectric complex, 104 

tourism, 123-24; foreign tourists, 124; in- 
vestment in, 130; tourist arrivals, 123 

Toyota, 112 

Trade Act (1974), 32 

Traffic Police, 209 

transportation, 118-22; air, 122; in Cara- 
cas, 45; impact of, 67; infrastructure 
development, 13; land, 118-21; net- 
work, 45; rapid-rail, 56; water, 121-22 

trienio junta (1945-48), 160, 162, 165, 
177, 180; church- state relations under, 
68; defense budget under, 180; disman- 
tled, 21; teachers' unions under, 71 

Trinidad, 4 

Trinidad and Tobago, 190; oil explora- 
tion in, 100 
Trujillo Molina, Rafael Leonidas, 26, 169 
Trujillo state, 48; migration from, 53 

Ultimas Noticias, 166 

UN. See United Nations 

unemployment; in 1980s, 87, 155; in 
1990s, xxiv 

Unidad Popular. See Popular Unity 

Unified Police Command, 208 

Union Nacional Opositora (UNO). See 
National Opposition Union 

Union Nacional Republicana (UNR). See 
Republican National Union 

Union Patriotica Militar (UPM). See 
Patriotic Military Union 

Union Republicana Democratica (URD). 
See Democratic Republican Union 

United Nations (UN), 173; border dis- 
pute submitted to, 191 ; membership in, 
168; peacekeeping mission in Nica- 
ragua, 170 

United Nations Food and Agriculture Or- 
ganization, 75 

United Nations Special Fund, 130 

United Press International (UPI), 166 

United States: agreement with, to restrict 
money laundering, 206; citizens living 
in Venezuela, 53; coal exported to, 110; 



272 



Index 



debt owed to, 171; education in, 74; ex- 
ports to, 126; financial aid from, 130; 
import policies, 171; imports from, 
124; influence of, on education system, 
72; intervention in Grenada, 184; in- 
vestment by, 128; iron exported to, 
110; materiel from, 187; military mis- 
sion to Venezuela, 180; military train- 
ing in, 179, 186; oil exported to, 98-99, 
101; relations with, 32, 171, 186-87; 
strategic relations with, 186-87; sup- 
port of Perez by, 22; trade with, 124; 
voluntary restraint agreement with, 108 

United States Steel Corporation, 106 

United States Treasury, 129 

United Vanguard, 164 

United Workers' Confederation of Vene- 
zuela, 161 

Universidad Centro-Occidental. See Mid- 
western University 

Universidad de Oriente. See Eastern 
University 

universities (see also under individual univer- 
sities), 74; enrollment in, 74; govern- 
ment interference in, 71; student 
protests in, 161; women in, 42, 67; 
women's studies programs in, 67 

University of the Andes, 74 

Unocal, 101 

UNR. See Republican National Union 

UPI. See United Press International 

UPM. See Patriotic Military Union 

upper class. See elite class 

urban areas {see also urban migration): de- 
fined, 53; income in, 87; oil profits used 
to modernize, 51; population, 41, 53 

urbanization: impact of, 67 

urban migration, 52, 53, 66, 69, 114; at- 
tempts to reverse, 56; influence of, on 
agriculture, 92; by peasants, 62 

URD. See Democratic Republican Union 

Uslar Pietri, Arturo, 28 

Valencia: concentration of population in, 
52; population of, 53; schools in, 71, 74 

Vallenilla Lanz, Laureano, 14 

Vargas, Julio, 19, 180 

Veba Oil Company, 101 

Venalum. See Industria Venezolana de 
Aluminio C.A. 

Venevision, 167 

Venezolana Internacional de Aviacion 



S.A. (VI AS A). See Venezuela Interna- 
tional Airways 
Venezuela International Airways (VIA- 
SA), 122 

Venezuelan Airmail Line (LAV), 122 
Venezuelan Chamber of the Broadcast- 
ing Industry, 167 
Venezuelan Children's Council (CVN), 
58 

Venezuelan Communist Party (PCV), 
17, 26, 30, 35, 152, 163-64; congres- 
sional representatives arrested, 26; 
legalized, 20, 30; outlawed, 26 
Venezuelan Confederation of Labor, 21 
Venezuelan Corporation of Guayana 
(CVG), 33, 83, 104; joint ventures of, 
104-5 

Venezuelan Democratic Party (PDV), 18 
Venezuelan Development Corporation 

(CVF), 24, 158 
Venezuelan Emergent Right, 163 
Venezuelan Investment Fund (FIV), 31 , 
83, 85, 106, 131; plans to dissolve, 143; 
role of, 143 
Venezuelan Military Industries Compa- 
ny (CAVIM), 196 
Venezuelan Organization (Orve), 17, 162 
Venezuelan Petrochemical Institute 

(IVP), 102 
Venezuelan Petrochemicals (Pequiven), 
102 

Venezuelan Petroleum Corporation 
(CVP), 27, 34, 98 

Venezuelan Petroleum Corporation 
(PDVSA), xxii, 34, 81, 85, 97, 142, 
158; Citgo purchased by, 130; creation 
of, 98; exploration by, 99-100; govern- 
ment involvement in, 37; politicization 
of, 37; problems in, xxviii; subsidiaries 
of, 98-99, 100, 110 

Venezuelan Shipping Company, 122 

Venezuelan Social Security Institute 
(IVSS), 76 

Venezuelan Student Federation (FEV), 
17, 161 

Venezuelan Television Network, 167 
Venezuelan Tourism Corporation, 123 
Vespucci, Amerigo, 4 
VI AS A. See Venezuela International 

Airways 
vice president, 138 
Viceroyalty of New Granada, 6 
Victorious Front, 29 



273 



Venezuela: A Country Study 



Villalba, Jovito, 16, 17, 136, 162, 163; 

and Democratic Republican Union, 20, 

30; in 1952 elections, 21 
Voluntary Dividend for the Community, 

77 

Voluntary Restraint Agreement (VRA), 
108 

voting, 138, 151 



wages: minimum, 87; real, decline in, 15 
water: transport, 121-22; treatment, 131 
Wells Aluminum, 106 
West Germany. See Federal Republic of 
Germany 

women: in elite class, 59; in labor force, 



42; in middle class, 59, 60, 67; in mili- 
tary, 194-95; opportunities for, 67; in 
politics, 67; professions of, 75; and 
religion, 69; roles of, 67, 69; suffrage 
for, 19; in universities, 42, 67 

women's studies programs, 67 

Workers' Bank, 115 

working class, 62 

World Bank, 116; aid from, 128, 131 
World War II, 18 



Zulia coal and steel complex, 36 
Zulia state, 48; coal deposits in, 110; ille- 
gal immigrants in, 55; petrochemical 
complex in, 103; schools in, 71 
Zulia University, 74 



274 



Published Country Studies 



(Area Handbook Series) 



550-65 


Afghanistan 


550-87 


Greece 


550-98 


Albania 


550-78 


Guatemala 


550-44 


Algeria 


550-174 


Guinea 


550-59 


Angola 


550-82 


Guyana and Belize 


550-73 


Argentina 


550-151 


Honduras 


550-169 


Australia 


550-165 


Hungary 


550-176 


Austria 


550-21 


India 


550-175 


Bangladesh 


550-154 


Indian Ocean 


550-170 


Belgium 


550-39 


Indonesia 


550-66 


Bolivia 


550-68 


Iran 


550-20 


Brazil 


550-31 


Iraq 


550-168 


Bulgaria 


550-25 


Israel 


550-61 


Burma 


550-182 


Italy 


550-50 


Cambodia 


550-30 


Japan 


550-166 


Cameroon 


550-34 


Jordan 


550-159 


Chad 


550-56 


Kenya 


550-77 


Chile 


550-81 


Korea, North 


550-60 


China 


550-41 


Korea, South 


550-26 


Colombia 


550-58 


Laos 


550-33 


Commonwealth Caribbean, 


550-24 


Lebanon 




Islands of the 






550-91 


Congo 


550-38 


Liberia 


550-90 


Costa Rica 


550-85 


Libya 


550-69 


Cote d'lvoire (Ivory Coast) 


550-172 


Malawi 


550-152 


Cuba 


550-45 


Malaysia 


550-22 


Cyprus 


550-161 


Mauritania 


550-158 


Czechoslovakia 


550-79 


Mexico 


550-36 


Dominican Republic and 


550-76 


Mongolia 




Haiti 






550-52 


Ecuador 


550-49 


Morocco 


550-43 


Egypt 


550-64 


Mozambique 


550-150 


El Salvador 


550-35 


Nepal and Bhutan 


550-28 


Ethiopia 


550-88 


Nicaragua 


550-167 


Finland 


550-157 


Nigeria 


550-155 


Germany, East 


550-94 


Oceania 


550-173 


Germany, Fed. Rep. of 


550-48 


Pakistan 


550-153 


Ghana 


550-46 


Panama 



275 



OOU— lOO 


Paraguay 


oou— 00 


Thailand 


CCA 1 QC 

OOU-loO 


rersian Oull states 


C C A QQ 

oou-tjy 


Tunisia 


CCA A o 


Peru 


C CA OA 

OOO-oO 


Turkey 


ccA 70 
000-/4 


Philippines 


CCA 7 A 

00U- /4 


U ganda 


550-162 


Poland 


550-97 


Uruguay 


C C A 1 O 1 

OOO-lol 


Portugal 


C C A *7 1 

000-/1 


Venezuela 


oou— lOU 


Romania 


oou— oz 


Vietnam 


i^fl 37 
OOU— J / 


Rwanda and Burundi 


oou— 100 


Yemens, The 


CCA CI 

00U-01 


Saudi Arabia 


oou-yy 


Yugoslavia 


550-70 


Senegal 


550-67 


Zaire 


OOU— lOU 


Sierra Leone 


oou— / 


Zambia 


CCA 1QA 

000-104 


Singapore 


c c A 171 

00U-1 / 1 


Zimbabwe 


OOO-oo 


Somalia 






OOU— i7J 


South Africa 






CCA AC 

oou-yo 


Soviet Union 






550-179 


Spain 






550-96 


Sri Lanka 






550-27 


Sudan 






550-47 


Syria 






550-62 


Tanzania 







276 




7^ 




PIN: 004243*000 



